ADVANCED DRAINAGE SYSTEMS, INC. (Form: S-1/A, Received: 07/02/2014 11:03:27)

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

As filed with the Securities and Exchange Commission on July 2, 2014

Registration No. 333-194980

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 4

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Advanced Drainage Systems, Inc.

(Exact name of registrant as specified in its charter)


Delaware	3084	51-0105665
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

4640 Trueman Boulevard

Hilliard, Ohio 43026

(614) 658-0050

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Joseph A. Chlapaty

Chairman, President & Chief Executive Officer

4640 Trueman Boulevard

Hilliard, Ohio 43026

(614) 658-0050

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Stephen C. Mahon, Esq.

Fredric L. Smith, Esq.

Aaron A. Seamon, Esq.

Squire Patton Boggs (US) LLP

41 South High Street, Suite 2000

Columbus, Ohio 43215
(614) 365-2700

Kirk A. Davenport II, Esq.

Ian D. Schuman, Esq.
Latham & Watkins LLP
885 Third Avenue

New York, New York 10022

(212) 906-1200

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated July 2, 2014

PROSPECTUS

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Advanced Drainage Systems, Inc.

Common Stock

This is the initial public offering of common stock of Advanced Drainage Systems, Inc.

We are offering shares of common stock in this offering. The selling stockholders identified in this prospectus are offering shares of common stock in this offering. We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders. Prior to this offering, there has been no public market for our common stock.

It is currently estimated that the initial public offering price per share will be between $ and $ . We have applied to list our common stock on the New York Stock Exchange under the symbol “WMS.”

Investing in our common stock involves risks. See “ Risk Factors ” beginning on page 19 of this prospectus.


	Per Share	Total
Price to the public	$	$
Underwriting discounts and commissions ⁽¹⁾	$	$
Proceeds to us (before expenses)	$	$
Proceeds to the selling stockholders (before expenses)	$	$

(1)	We refer you to “Underwriting” beginning on page 163 of this prospectus for additional information regarding total underwriter compensation.

The underwriters also may purchase up to additional shares of common stock from the selling stockholders at the initial public offering price less the underwriting discounts and commissions.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock on or about , 2014.


Barclays		Deutsche Bank Securities


Citigroup		RBC Capital Markets


BofA Merrill Lynch		Fifth Third Securities		PNC Capital Markets LLC

Prospectus dated , 2014

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TABLE OF CONTENTS


	Page
Trademarks		ii
Market and Industry Data		ii
Presentation of Information		ii
Presentation of Certain Financial Measures		iii
Prospectus Summary		1
Risk Factors		19
Special Note Regarding Forward-Looking Statements And Information		41
Use of Proceeds		43
Dividend Policy		44
Capitalization		45
Dilution		47
Selected Historical Consolidated Financial Data		48
Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
Industry		80
Business		90
Management		110
Executive Compensation		120
Principal and Selling Stockholders		140
Certain Relationships and Related-Party Transactions		143
Description of Employee Stock Ownership Plan		144
Description of Capital Stock		146
Shares of Common Stock Eligible for Future Sale		152
Description of Certain Indebtedness		154
Material U.S. Federal Tax Considerations for Non-U.S. Holders		159
Underwriting (Conflicts of Interest)		163
Legal Matters		170
Where You Can Find More Information		170
Experts		170
Index to Consolidated Financial Statements		F-1

We, the selling stockholders and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby but only in circumstances and in jurisdictions where it is lawful to do so.

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TRADEMARKS

We use various trademarks, service marks and brand names that we deem particularly important to the marketing activities and operation of our various lines of business, and some of these marks are registered in the United States and, in some cases, other jurisdictions. This prospectus also refers to the brand names, trademarks or service marks of other companies. All brand names and other trademarks or service marks referenced in this prospectus, including N-12 ^® , SaniTite ^® , StormTech ^® , Nyloplast ^® , Inserta Tee ^® , BaySeparator™, BayFilter™ and FleXstorm™, are the property of their respective holders. Solely for convenience, we refer to trademarks, service marks and brand names in this prospectus without ™, ^SM and ^® symbols. We do not intend our use or display of other parties’ trademarks, service marks or brand names to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

MARKET AND INDUSTRY DATA

This prospectus includes estimates regarding market and industry data and forecasts, which are based on publicly-available information, industry publications and surveys, reports from government agencies, reports by market research firms and our own estimates based on our management’s knowledge of and experience in the market sectors in which we compete. These estimates and forecasts are based on data from third-party sources, including certain market and industry data provided on a subscription basis by the Freedonia Group, Inc., an independent research firm and industry consultant based in Cleveland, Ohio, which we refer to as Freedonia. We also base certain estimates and forecasts related to stormwater retention/detention and water quality on a special study that we commissioned for a fee specifically for the purpose of this offering by Freedonia Custom Research, Inc., an affiliate of Freedonia, which we refer to in this prospectus as the Freedonia Special Report. We have not independently verified market and industry data provided by Freedonia, or by other third-party sources such as McGraw Hill, the U.S. Environmental Protection Agency, Reed Construction Data, the American Institute of Architects, the U.S. Census Bureau, the National Association of Realtors, the St. Louis Federal Reserve, HIRI / IHS Global Insight, The Ohio State University and the U.S. Department of Agriculture, although we believe such market and industry data included in this prospectus is reliable. This information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in surveys of market size.

PRESENTATION OF INFORMATION

Unless the context otherwise indicates or requires, as used in this prospectus, the terms “we,” “our,” “us,” “ADS” and the “Company” refer to Advanced Drainage Systems, Inc. and its directly- and indirectly-owned subsidiaries as a combined entity, except where it is clear that the terms mean only Advanced Drainage Systems, Inc. exclusive of its subsidiaries.

Because our fiscal year ends on March 31, any reference to a fiscal year means the fiscal year ended March 31 of the same calendar year. For example, references to “fiscal year 2014” mean the fiscal year ending March 31, 2014 and references to “fiscal year 2013,” “fiscal year 2012” and “fiscal year 2011” mean the fiscal years ended March 31, 2013, March 31, 2012 and March 31, 2011, respectively.

Our consolidated financial statements include our ownership interests in various consolidated joint ventures through which we conduct operations in Mexico and Central America. We also have an ownership interest in an unconsolidated joint venture through which we conduct operations in South America, which we refer to in this prospectus as our South American Joint Venture, and an unconsolidated joint venture through which we conduct certain operations in the United States, which we refer to in this prospectus as our BaySaver Joint Venture. Our equity interest in the operating results of both the South American Joint Venture and the BaySaver Joint Venture

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is presented in our consolidated financial statements as equity in net (income) loss of unconsolidated affiliates in accordance with U.S. generally accepted accounting principles, or GAAP. Although not consolidated under GAAP, we treat the South American Joint Venture and the BaySaver Joint Venture as if they are consolidated subsidiaries for internal reporting purposes. Throughout this prospectus, when we refer to our financial results or operations, we are referring to our financial results and operations as presented in our consolidated financial statements under GAAP, which do not consolidate our South American Joint Venture or our BaySaver Joint Venture, unless the context otherwise indicates.

We also sponsor a tax-qualified employee stock ownership plan, or ESOP, that covers our employees who meet certain service requirements. The ESOP was originally funded with a 30-year term loan from us as well as shares of our convertible preferred stock through a transfer of assets from our profit sharing retirement plan. The loan is secured by a pledge of unallocated shares of convertible preferred stock purchased by the ESOP that has not yet been released from the pledge and allocated to ESOP accounts. The 2.50% Cumulative Convertible Voting Preferred Stock held by the ESOP is referred to in this prospectus as our convertible preferred stock. The ESOP operates as a leveraged ESOP and was designed to enable eligible employees to acquire stock ownership interests in their accounts under the ESOP. See “Description of Employee Stock Ownership Plan” for a description of the ESOP.

Unless otherwise indicated, all information in this prospectus assumes the following:

•

a -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part;

•

no exercise by the underwriters of their option to purchase additional shares;

•

the filing of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior to the closing of this offering; and

•

an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus.

PRESENTATION OF CERTAIN FINANCIAL MEASURES

For purposes of calculating the weighted average number of shares outstanding and net income per share in this prospectus, we divide net income available to common stockholders by the weighted average number of shares of common stock outstanding. These items are described below in “—Summary Consolidated Financial Data” and “Selected Historical Consolidated Financial Data.”

We refer in this prospectus to Redeemable Common Stock, which represents shares of our common stock that are held by certain stockholders who hold in excess of 15% of our common stock. These stockholders entered into an amended and restated stockholders’ agreement, which provides such stockholders with the right to cause the shares to be repurchased by us at fair value in certain specified circumstances as described in Note 16 to our consolidated financial statements included elsewhere in this prospectus. As this right is considered for purposes of GAAP to be a redemption right, which is outside our control, we have classified the shares of common stock held by such stockholders in the mezzanine section of our consolidated balance sheets and changes in fair value are recorded in retained earnings. We anticipate that the stockholders’ agreement will be terminated upon completion of this offering and the rights associated with these shares, which require them to be classified in mezzanine equity, will no longer be in effect. Accordingly, we anticipate reclassifying these balances to total stockholders’ equity upon the completion of this offering. Our Redeemable Common Stock is also described below in “—Summary Consolidated Financial Data” and “Selected Historical Consolidated Financial Data.”

We also refer in this prospectus to Redeemable Convertible Preferred Stock, which represents our convertible preferred stock held by our ESOP. Prior to this offering, the trustee of our ESOP has the ability to

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require us to repurchase the shares of convertible preferred stock at fair value in the event that it needs cash to pay for distributions, pre-retirement diversification, or other expenses, causing the shares to be repurchased at the option of the holder as described in Note 16 to our consolidated financial statements included elsewhere in this prospectus. As this right is considered for purposes of GAAP to be a redemption right, which is outside our control, we have classified the shares of convertible preferred stock in the mezzanine section of our consolidated balance sheets and changes in fair value are recorded in retained earnings. Upon completion of this offering, the rights associated with these shares, which require them to be classified in mezzanine equity, will no longer be in effect. Accordingly, we anticipate reclassifying these balances to total stockholders’ equity upon completion of this offering. Our Redeemable Convertible Preferred Stock is also described below in “—Summary Consolidated Financial Data” and “Selected Historical Consolidated Financial Data.”

Certain financial measures presented in this prospectus, such as System-Wide Net Sales, Net Income Per Share As Adjusted—Basic and Diluted, EBITDA, Adjusted EBITDA, Segment EBITDA and Segment Adjusted EBITDA, are not recognized under GAAP. For definitions of System-Wide Net Sales, Net Income Per Share As Adjusted—Basic and Diluted, EBITDA, Adjusted EBITDA, Segment EBITDA and Segment Adjusted EBITDA and reconciliations of those measures to the most directly comparable GAAP measures, see “Selected Historical Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Results of Operations.”

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PROSPECTUS SUMMARY

The following summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the information set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements and notes included elsewhere in this prospectus, before making an investment decision.

Our Company

We are the leading manufacturer of high performance thermoplastic corrugated pipe, providing a comprehensive suite of water management products and superior drainage solutions for use in the construction and infrastructure marketplace. Our innovative products are used across a broad range of end markets and applications, including non-residential, residential, agriculture and infrastructure applications. We have established a leading position in many of these end markets by leveraging our national sales and distribution platform, our overall product breadth and scale and our manufacturing excellence. In North America, our national footprint combined with our strong local presence and broad product offering makes us the leader in an otherwise highly fragmented sector comprised of many smaller competitors. We believe the markets we serve in the United States represent approximately $10.1 billion of annual revenue opportunity. In addition, we believe the increasing acceptance of thermoplastic pipe products in international markets represents an attractive growth opportunity. For the fiscal year ended March 31, 2014, we generated net sales of $1,069.0 million, net income of $12.9 million and Adjusted EBITDA of $147.0 million and, as of March 31, 2014, we had $454.0 million of total outstanding debt. For a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, see “Selected Historical Consolidated Financial Data.”

Our products are generally lighter, more durable, more cost effective and easier to install than comparable alternatives made with traditional materials. Following our entrance into the non-residential construction market with the introduction of N-12 corrugated polyethylene pipe in the late 1980s, our pipe has been displacing traditional materials, such as reinforced concrete, corrugated steel and polyvinyl chloride, or PVC, across an ever expanding range of end markets. This has allowed us to consistently gain share and achieve above market growth throughout economic cycles. We expect to continue to drive conversion to our products from traditional products as contractors, civil design engineers and municipal agencies increasingly acknowledge the superior physical attributes and compelling value proposition of our thermoplastic products. In addition, we believe that overall demand for our products will benefit as the regulatory environment continues to evolve.

Our broad product line includes corrugated high density polyethylene (or HDPE) pipe, polypropylene (or PP) pipe and related water management products. Building on our core drainage businesses, we have aggressively pursued attractive ancillary product categories such as storm and septic chambers, PVC drainage structures, fittings and filters, and water quality filters and separators. We refer to these ancillary product categories as Allied Products. Given the scope of our overall sales and distribution platform, we have been able to drive growth within our Allied Products and believe there are significant growth opportunities going forward.

We have an extensive domestic network of 48 manufacturing plants and 19 distribution centers allowing us to effectively serve all major markets in the United States, which we define as the largest 100 metropolitan statistical areas based on population. The effective shipping radius for our pipe products is approximately 200 miles, thus competition in our industry tends to be on a regional and local basis with minimal competition from distant markets and imports. We are the only supplier of high performance thermoplastic corrugated pipe in our industry with a national footprint, thereby allowing us to efficiently service those customers that value having one source of supply throughout their entire distribution network. We believe our extensive national footprint creates a cost and service advantage versus our HDPE pipe producing competitors, the largest of which has only 10 domestic HDPE pipe manufacturing plants. Internationally, we have two manufacturing plants and three distribution centers in Canada, four manufacturing plants in Mexico, four manufacturing plants and five distribution centers in South America and one distribution center in Europe.

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We have long-standing distribution relationships with many of the largest national and independent waterworks distributors, including Ferguson, HD Supply and WinWholesale, who sell primarily to the storm sewer and sanitary sewer markets. We also utilize a network of hundreds of small to medium-sized independent distributors across the United States. We have strong relationships with major national retailers that carry drainage products, including The Home Depot, Lowe’s, Ace Hardware, Menards and Do it Best, and also sell to buying groups and co-ops in the United States that serve the plumbing, hardware, irrigation and landscaping markets. The combination of our large sales force, long-standing retail and contractor customer relationships and extensive network of manufacturing and distribution facilities complements and strengthens our broad customer and market coverage.

We believe the ADS brand has long been associated with quality products and market-leading performance. Our trademarked green stripe, which is prominently displayed on many of our products, serves as clear identification of our commitment to the customers and markets we serve.

As illustrated in the charts below, we provide a broad range of high performance thermoplastic corrugated pipe and related water management products to a highly diversified set of end markets and geographies.

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Our Strengths

We believe that we benefit significantly from the following competitive strengths:

Market leader with unmatched scale. We are the leading manufacturer of high performance thermoplastic corrugated pipe and a leading manufacturer of related water management products. We believe our extensive national footprint of 48 manufacturing plants and 19 distribution centers creates a cost and service advantage versus our HDPE pipe producing competitors, the largest of which has only 10 domestic HDPE pipe manufacturing plants. We maintain an in-house fleet of approximately 625 tractor-trailers and approximately 1,100 trailers that are specially designed to haul our lightweight pipe and fittings products. Our effective shipping radius is approximately 200 miles from one of our manufacturing plants or distribution centers. Our world-class manufacturing expertise and extensive national distribution and fleet network allow us to service customers across the United States on a cost-effective and timely basis. Our long-standing customer relationships also provide us with visibility to attractive market opportunities.

Well positioned to drive continued material conversion. Our products are generally lighter, more durable, more cost effective and easier to install than comparable alternatives made with traditional materials. For example, concrete pipe generally weighs more than 20 times as much per foot as our thermoplastic pipe, resulting in the significant handling advantages that our product line enjoys during installation by contractors. These advantages typically provide our thermoplastic pipe with an installed cost advantage of approximately 20% over concrete pipe. High performance thermoplastic corrugated pipe represented approximately 25% of the total storm sewer market in 2012, up from what we believe was less than 10% ten years ago and less than 1% twenty years ago. We believe the penetration rate will continue to increase over time, as contractors, engineers and municipal agencies increasingly acknowledge the superior attributes and compelling value proposition of our thermoplastic products. We believe the recent introduction of our PP pipe products will also help accelerate this conversion given the additional applications for which our PP pipe products can be used. We continue to drive this material conversion through extensive sales force training and education of our customers. We have been at the forefront of educating an industry undergoing significant change in the regulatory environment, while pushing for expanded approvals of our products in new markets and geographies. Since 2006, 32 states have enhanced their approval of our pipe products, and an average of approximately 60 state, county and municipal approvals have been added or enhanced each year over the past five years.

Broad portfolio of Allied Products. Our Allied Products include storm and septic chambers, PVC drainage structures, fittings and filters and water separators. These products complement our pipe product lines and allow us to offer a comprehensive water management solution to our customers and drive organic growth. We have a long history of leveraging our broad distribution platform to develop or acquire, and market, complementary Allied Products that provide new technologies and product capabilities. Given our strong brand recognition, network of customer and distributor relationships and large team of trained salespeople, we believe we are the acquirer of choice for many providers of ancillary products who wish to partner with an industry leader. Our broad product line and reputation for quality provide our sales force with a competitive advantage in sourcing new opportunities and cross-selling products.

Industry-leading manufacturing and technical expertise. We believe we have developed a reputation in the industry for products that deliver technically-superior performance with lower installation and maintenance costs versus competing products. Our products are lightweight and flexible, strong, resistant to corrosion and resistant to abrasion. These characteristics allow for easy and low-cost installation, provide strength comparable to much heavier materials (as a result of the corrugated profile design of our thermoplastic pipe products) and provide an excellent service life expectancy. Our significant investment in custom-designed mold and die tooling ($173 million investment over the last nine years) allows us to manufacture a variety of corrugated pipe sizes and provides us with the flexibility to meet demand fluctuations in local regions. In addition, we rotate these setups across our network of manufacturing plants as needed to meet demand, which provides us with a unique

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competitive advantage. We employ proprietary resin blending technology to minimize raw material cost and optimize production efficiency, while maintaining a consistent level of product performance. Utilizing this technology has allowed us to increase our ratio of recycled resin as a percent of total resin from approximately 24% in fiscal year 2005 to approximately 58% in fiscal year 2014, resulting in significant cost savings and reduced exposure to fluctuations in raw material costs.

Long-term customer relationships. We believe we have the largest and most experienced sales force in the industry, which allows us to maintain strong, long-standing relationships with key distributors, contractors and engineers. The combination of our technical expertise, product selection and customer delivery capabilities allows us to meet our customers’ critical installation schedules and positions us as a strategic partner. We strive to educate the regulatory and design community while offering the distributor and contractor network a comprehensive product suite. Our products are manufactured, assembled, delivered and serviced from a network of plants and yards that are strategically positioned in close proximity to most major domestic geographic markets. Our national scale combined with our local presence, dedication to service and broad product offering has enabled us to maintain our long-standing customer relationships.

Highly diversified across end markets, channels and geographies. We are strategically diversified across a broad range of end markets, distribution channels and geographies. Our products are used globally in a diverse range of end markets across non-residential construction, residential construction, agriculture and infrastructure. These end markets include storm sewer systems, agriculture, retail, stormwater retention/detention, on-site septic systems and structures. We maintain and service these end markets through strong product distribution relationships with many of the largest national and independent waterworks distributors, a network of hundreds of small to medium-sized distributors across the United States, major national retailers that carry drainage products and a broad variety of buying groups and co-ops in the United States. We serve our customers in all 50 U.S. states as well as approximately 90 other countries. Our domestic sales, which represented approximately 88% of our net sales in fiscal year 2014, are diversified across all regions of the United States. Approximately 12% of our net sales in fiscal year 2014 were generated outside of the United States.

Experienced management team with successful operating record and significant equity ownership. Our management team, led by our Chief Executive Officer, Joe Chlapaty, has an average of over 23 years of industry experience. We have a long history of generating profitable growth, attractive margins and cash flow. During periods of weaker economic conditions, we believe we have benefitted from an increased market focus on our products as a cost effective alternative to traditional materials. In stronger economic cycles, we have delivered profitable growth and an ability to leverage our scale and excess production capacity to meet rapid increases in demand.

After the completion of this offering, our management and directors will own approximately % of our common stock on a fully-converted basis. In addition, after the completion of this offering, the convertible preferred stock held by our ESOP will account for approximately % of our common stock on a fully-converted basis. This high level of management and employee ownership ensures that incentives are closely aligned with equity holders.

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Our Business Strategy

We intend to grow our net sales, improve our profitability and enhance our position as the leading provider of high performance thermoplastic corrugated pipe and related water management products by executing on the following strategies.

Continue to drive conversion to our products. Our products are generally lighter, more durable, more cost effective and easier to install than comparable alternatives made with traditional materials such as concrete, steel and PVC. We intend to continue to drive conversion to our products from traditional products as contractors, engineers and municipal agencies increasingly acknowledge the superior attributes and compelling value proposition of our thermoplastic products. Expanded regulatory approvals allow for their use in new markets and geographies, and we continue to invest heavily in industry education. We believe we are the industry leader in these efforts as regulatory approvals are essential to the specification and acceptance of these product lines.

Expand our product offering and markets served. Our strong market position provides us with insight into the evolving needs of our customers, which has allowed us to proactively develop and deliver comprehensive water management solutions. The strength of our overall sales and distribution platform has allowed us to acquire new Allied Products and deliver solution-based product portfolios that typically result in significantly higher net sales post-acquisition than the products generated before the addition to our product portfolio. Our ability to further develop our offering of Allied Products represents an attractive opportunity to capture additional growth and improve our overall margins. We will continue to focus on enhancing our core products and expanding our Allied Products through cross-selling opportunities in order to further penetrate untapped markets and customers. We also expect to continue to enter into selective adjacent new markets that leverage our sales and engineering capabilities, customer relationships and national distribution network and provide more water management solutions to our customers.

Expand our presence in attractive new geographies. Outside of the United States, we believe thermoplastic corrugated pipe represents a small part of the overall market. We further believe there is significant opportunity to convert new geographies based on the overall performance and value of our products, similar to what continues to occur in our existing markets. To date, in order to increase our speed to market, we have expanded internationally primarily through joint ventures with best-in-class local partners. Our existing joint ventures provide us with access to markets such as Brazil, Chile, Argentina, Mexico, Peru and Colombia. Combining a local partner’s customer relationships, brand recognition and local management talent, with our world-class manufacturing and process expertise, broad product portfolio and innovation, creates a strong platform with additional opportunities for international expansion. In the future, we will continue to identify new geographies to access markets through joint venture relationships with domestic partners in targeted areas.

Capitalize on growth related to the recovery in our primary end markets. We believe we are well positioned to take advantage of renewed growth and recovery in the non-residential and residential construction and infrastructure markets in the United States. Additionally, we believe we have the potential to capitalize on a substantial backlog of deferred infrastructure spending in the United States as a result of upgrades and repairs that were delayed in the recent economic downturn. Spending on the replacement of aging water drainage and sewer infrastructure (estimated to cost approximately $298 billion between 2013 and 2033, according to the American Society of Civil Engineers, or ASCE) and stricter U.S. Environmental Protection Agency, or EPA, guidelines for stormwater and wastewater management will drive additional demand for our products.

Continue our focus on operational excellence. Our focus on continuously improving operating efficiencies, reducing costs and improving product quality has enabled us to improve our position as a leading low-cost provider. We constantly strive to achieve operating and cost efficiencies across all facets of our business. For

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example, we employ sophisticated resin blending technology to minimize raw material costs and optimize production efficiency, while maintaining a high level of product quality and performance. We believe this and our other initiatives, combined with continued prudent management of our overhead, and our ability to increase our sales without the requirement of increased capital expenditures will allow us to maximize profitability as we continue to grow.

Selectively pursue strategic acquisitions. By utilizing our customer relationships and sales force, we have a demonstrated ability to identify and integrate numerous strategic acquisitions. We believe our strong reputation for product growth, as well as our strong brand recognition, network of customer and distributor relationships, and large team of trained salespeople, has allowed us to become the acquirer of choice, as demonstrated by our ability to identify new technologies and product capabilities and thereafter acquire such technologies and products. The acquisitions of strategic product lines such as BaySaver, FleXstorm, Nyloplast, Inserta Tee and StormTech have strengthened our market position while enhancing long-term growth and profitability and are examples of our ability to complete and integrate acquisition opportunities. We have remained one of the strongest and best capitalized companies in the industry throughout the recent economic cycle and are well positioned to capitalize on current market dynamics to selectively acquire key products and technologies. We have strong industry relationships and maintain an active acquisition pipeline.

Industry Overview and Trends

We serve a broad range of end markets across non-residential construction, residential construction, agriculture and infrastructure. We are the leading manufacturer of high performance thermoplastic corrugated pipe and a leading manufacturer of related water management products. We compete against other HDPE pipe producers, as well as pipe manufacturers selling products made from traditional materials such as concrete, corrugated steel and PVC on a national, regional and local basis. We compete primarily in the United States and Canada; however, we have also expanded internationally in Mexico, Central America and South America through our joint ventures. We believe the markets we serve in the United States represent approximately $10.1 billion of annual revenue opportunity. In addition, we believe the increasing acceptance of thermoplastic pipe products in international markets represents an attractive growth opportunity.

Core Product Categories

Pipe Market

Demand for our products is largely driven by residential and non-residential construction, transportation and related water drainage infrastructure spending and the repair and replacement of aging stormwater management infrastructure. Freedonia estimates that demand for large diameter pipe (defined as 15” diameter or larger depending on industry standards by material type) in the United States will increase at an average of 6.2% per year from approximately 146 million feet in 2011, to 197 million feet in 2016. We compete in the storm sewer, drainage, sanitary sewer and irrigation markets, which collectively represent approximately 70% of the overall large diameter pipe market in the United States. According to Freedonia, sanitary and storm sewers, which represent approximately 50% of the total large diameter pipe market demand, are expected to continue to drive growth for the large diameter pipe market through 2016. Additionally, Freedonia estimates that the largest expected growth in the forecast period will come from the drainage market, as non-residential and residential construction continues to rebound. According to Freedonia, HDPE, the primary material in our products, is projected to become a larger portion of the overall large diameter pipe market as states and municipalities are expected to continue to adopt this product as a result of its superior attributes and approve its use in a broader range of applications.

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LOGO

Source: Freedonia

Positive end market trends in the non-residential construction, residential construction, agricultural and infrastructure markets are also expected to drive increased demand for pipe products in Canada. Growth in fixed investment spending is expected to result in a higher number of sewer and drainage infrastructure projects. Housing starts in Canada are forecasted to grow from 185,000 in 2012 to 215,000 by 2017, according to Freedonia. We believe the large industry around forestry, minerals, petroleum and natural gas markets in Canada provide opportunity for pipe applications.

The GDP in Mexico is forecasted to expand at 3.7% annually through 2017. Construction growth in Mexico is driven by demand for housing, non-residential property and additional investment in public infrastructure. Freedonia forecasts HDPE pipe demand to grow 8% annually through 2017 in Mexico, to 50,000 metric tons, the fastest growth rate of any plastic resin.

The largest pipe markets in South America are Brazil and Chile. Other South American countries such as Argentina, Colombia, Ecuador and Peru are also forecasted to see strong growth in construction. Brazil has large infrastructure investment occurring related to the country hosting the 2014 FIFA World Cup and 2016 Summer Olympics. HDPE pipe is taking market share from concrete and PVC pipe in drainage and sewer applications in these markets. In Argentina, primary end markets for HDPE pipe are construction, natural resources and agriculture.

Related Water Management Solutions Market

We also offer a wide range of Allied Products to meet our customers’ water management requirements across various markets. The demand for these products is largely driven by residential and non-residential construction, transportation and related water drainage infrastructure spending and the replacement of aging stormwater management infrastructure.

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Stormwater Retention/Detention

Current EPA regulations require any development of one acre or larger to retain stormwater on site and gradually release it over time. This requirement is met by either using natural solutions, such as retention ponds, or structural solutions, which include systems constructed underground. According to the Freedonia Special Report, demand in this market is forecasted to grow 7.5% annually from 2013 to 2016. Growth of structural solutions is forecasted to grow 8.5% over this period, compared to 5.4% for natural solutions.

On-Site Septic

According to the EPA, an estimated 20% of total U.S. housing units depend upon on-site septic systems for the treatment and disposal of household sewage. An on-site septic system allows for effluent to be leached into the soil for treatment. The market is driven by new residential construction and, to a lesser extent, the repair and replacement of existing systems. Our plastic septic chamber products perform their septic treatment functions with gravel, reducing the cost to the contractor and homeowner over traditional pipe and stone systems that are also used for these systems.

Structures

Drainage structures are used in all major storm projects and are used to move surface-collected stormwater vertically down to pipe conveyance systems. The predominant products used today are concrete structures. We compete in this market with our Nyloplast product line, an engineered drainage structure made from PVC. Our Nyloplast product reduces construction cost and increases speed of installation compared to traditional precast concrete structures.

Water Quality

EPA regulations also limit the amount of sediment or other pollutants in discharged water. Similar to stormwater management, these requirements are met through the use of either natural or structural solutions. Freedonia forecasts that demand for these solutions will increase 10.1% annually through 2016, with natural and structural solutions growing at nearly the same rate. We provide structural solutions for water quality through our BaySaver and FlexStorm product lines.

Geosynthetics

We offer geosynthetic products through resale agreements with leading suppliers. Geosynthetics are used in a wide range of environmental and civil engineering applications to promote drainage, retain soils, control the flow of liquids and construct natural soil structures. Demand in this market is primarily driven by trends in non-residential and transportation construction activity. According to a December 2013 study by Freedonia on world geosynthetics demand, U.S. geosynthetic demand is forecasted to grow 6.5% annually through 2017.

Core End Markets

Non-Residential Construction (51% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our net sales in the U.S. non-residential construction market were $480.1 million, which represented 51% of our domestic net sales. Reed Construction Data is forecasting U.S. non-residential construction, consisting of commercial, institutional, manufacturing and warehouse construction, to grow 6.6% annually from 2013 to 2016 and increase 8.2% in 2014 over 2013.

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Residential Construction (21% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our net sales in the U.S. residential construction market were $194.4 million, which represented 21% of our domestic net sales. U.S. residential new construction has begun to recover since reaching historic lows during the recent economic downturn. While new housing starts demonstrated an annual growth rate of 16% from 2010 to 2013, current levels remain substantially below the long-term average of 1.5 million starts since the U.S. Census Bureau began reporting the data in 1959. According to McGraw Hill, residential new housing is expected to increase to 1.11 million starts, or 14%, in 2014, and increase to 1.33 million starts, or 20%, in 2015. As of September 2013, the Home Improvement Research Institute projects that U.S. sales of repair, renovation and improvement products will grow at a rate of 5.4% in 2013, 6.8% in 2014 and 7.0% in 2015, driven by the improving economy, rising home prices and greater consumer confidence.

Agriculture (19% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our net sales in the U.S. agriculture market were $176.4 million, which represented 19% of our domestic net sales. U.S. and global demand for corn and soybeans, net farm income and corn use for ethanol are significant drivers of our agriculture business and are leading indicators in regards to our product demand. According to the U.S. Department of Agriculture, agricultural exports were a record $140.9 billion in 2013 and are forecasted to increase 1% in 2014. According to the U.S. Department of Agriculture, net farm income increased to $130.5 billion in 2013, up from $85.0 billion in 2008. The U.S. Department of Agriculture estimates that 40% of corn production in the United States is consumed by ethanol production, with requirements not expected to decline in the near future.

Infrastructure (9% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our net sales in the U.S. infrastructure market were $84.6 million, which represented 9% of our domestic net sales. The main drivers of our products in the infrastructure market include the construction of streets and highways, storm and sanitary sewers, airports and railroads. ASCE rated the overall U.S. infrastructure a grade of D+ in its recent 2013 report card, and estimates that $298 billion is needed over the next 20 years to replace and upgrade the existing wastewater infrastructure in the United States. ASCE’s primary concern is the need to address sanitary and combined sewer overflows. Citing the 2008 Clean Watersheds Needs Survey, the ASCE report states $64 billion is needed to address combined sewer overflows and stormwater management over the 20-year period. There are four million miles of public roads and highways in the United States, primarily constructed over 50 years ago. The Federal Highway Administration estimates that $170 billion is needed annually to improve the condition of the nation’s roads and highways, a significant increase from the $101 billion that is needed to just maintain their current condition.

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Ownership and Corporate Information

We have a long history of employee ownership as well as ownership by financial sponsors. Our current ownership is comprised of members of our management team and other non-employee stockholders, ASP ADS Investco, LLC, an affiliate of American Securities LLC, or American Securities, and our ESOP in which our employees participate. For more information regarding our ESOP, see “Description of Employee Stock Ownership Plan.”

The following chart illustrates our ownership and organizational structure, including stock ownership percentages, after giving effect to this offering (assuming no exercise of the underwriters’ option to purchase additional shares):

LOGO

⁽¹⁾	Excludes (on a post-stock split basis) million shares of common stock issuable upon exercise of options outstanding as of , 2014 at a weighted average exercise price of $ per share.

⁽²⁾	ASP ADS Investco, LLC is an affiliate of American Securities.

⁽³⁾

The ESOP currently holds all outstanding shares of our convertible preferred stock, which converts at the election of the ESOP into shares of our common stock as further described below under “Description of Employee Stock Ownership Plan.” The percentage ownership for the ESOP is on an as-converted basis.

⁽⁴⁾	ADS Worldwide, Inc. is our wholly-owned subsidiary through which we hold interests in the various international joint ventures through which we operate in Mexico, Central America and South America.

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Summary of Risk Factors

Our business is subject to a number of risks of which you should be aware and carefully consider before making an investment decision. These risks are discussed in “Risk Factors,” and include but are not limited to the following:

•

fluctuations in the price and availability of resins, our principal raw material, and our inability to pass on resin price increases to customers;

•

our inability to obtain adequate supplies of resins from suppliers;

•

disruption or volatility in general business and economic conditions in the markets in which we operate, such as non-residential and residential construction, agriculture and infrastructure markets ;

•

our ability to convert current demand for competitive products into demand for our products;

•

effect of weather or seasonality;

•

loss of any of our significant customers;

•

failure to collect monies owed from customers;

•

exposure of our international operations to political, economic and regulatory risks;

•

risks associated with conducting a portion of our operations through joint ventures;

•

our ability to successfully expand into new geographic or product markets;

•

risks associated with acquisitions;

•

risks associated with increased fuel and energy prices;

•

risks associated with manufacturing process, construction defect and product liability and legal proceedings;

•

our current levels of indebtedness and related restrictions and limitations imposed on us;

•

securities or industry analysts may not publish research or may publish misleading or unfavorable research about our business; and

•

fulfilling our obligations incident to being a public company.

Recent Developments

Set forth below is preliminary net sales and income from operations data that we expect to report for our first quarter ended June 30, 2014. We have provided a range for the preliminary estimates described below primarily because our financial closing procedures for the three months ended June 30, 2014 are not yet complete. Our independent registered public accounting firm, Deloitte & Touche LLP, has not audited or reviewed, and does not express an opinion with respect to this data.

While we currently expect that our final net sales and income from operations will be within the ranges described below, it is possible that our final net sales or our income from operations will not be within the ranges we currently estimate due to the completion of our financial closing procedures, final adjustments, completion of the review of our financial statements and other developments that may arise between now and the time the financial statements are completed. Estimates of results are inherently uncertain and subject to change. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policy and Estimates,” “Risk Factors—Risks Relating to Our Business” and “Special Note Regarding Forward-Looking Statements and Information.”

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The following are preliminary estimates for the three months ended June 30, 2014:

•

For the three months ended June 30, 2014, we expect to report net sales in the range of $ million to $ million, a(n) of % at the midpoint of the range as compared to $298.4 million for the three months ended June 30, 2013. The estimated in net sales is primarily due to .

•

For the three months ended June 30, 2014, we expect to report income from operations in the range of $ million to $ million, a(n) of % at the midpoint of the range as compared to $ million for the three months ended June 30, 2013, or of % at the midpoint of the range as compared to $ million for the three months ended June 30, 2013 which excludes the gain on sale of assets/business of $ million resulting from the sale of our DrainTech product line which occurred during the three months ended June 30, 2013. The estimated in income from operations is primarily due to .

Deloitte & Touche LLP has not audited, reviewed, compiled or performed any procedures and does not express an opinion or any other form of assurance with respect to these preliminary estimates.

Corporate Information

We were founded in 1966 and are a Delaware corporation. Our principal executive offices are located at 4640 Trueman Boulevard, Hilliard, Ohio 43026, and our telephone number at that address is (614) 658-0050. Our corporate website is www.ads-pipe.com. Information on, and which can be accessed through, our website is not part of, and is not incorporated by reference in this prospectus.

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The Offering

Common stock offered by us

shares.

Common stock offered by the selling stockholders

shares ( shares if the underwriters exercise in full their option to purchase additional shares).

Common stock outstanding immediately after this offering

shares ( shares if the underwriters exercise in full their option to purchase additional shares).

Option to purchase additional shares of common stock

The underwriters have a 30-day option to purchase up to an additional shares of common stock from the selling stockholders.

Reserved Shares

At our request, the underwriters have reserved for sale, at the initial public offering price, up to % of the shares offered by this prospectus for sale to certain of our directors, officers, employees and other persons selected by us. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.

Proposed New York Stock Exchange symbol

“WMS.”

Use of proceeds

We intend to use the net proceeds from this offering to repay at least $ million of outstanding indebtedness under the revolving portion of our credit facility. We intend to use the remaining proceeds (if any) for general corporate purposes. We will not receive any proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds.”

Conflicts of Interest

The net proceeds from this offering will be used to repay borrowings under the revolving portion of our credit facility. Because an affiliate of Fifth Third Securities, Inc. and PNC Capital Markets LLC are lenders under our revolving credit facility and each will receive 5% or more of the net proceeds of this offering, Fifth Third Securities, Inc. and PNC Capital Markets LLC are each deemed to have a “conflict of interest” under Rule 5121 of the Financial Industry Regulatory Authority, Inc., or FINRA. As a result, this offering will be conducted in accordance with FINRA Rule 5121. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest, are not affiliates of any member that has a conflict of interest and meet the requirements of paragraph (f)(12)(E) of FINRA Rule 5121. See “Use of Proceeds” and “Underwriting (Conflicts of Interest).”

Risk factors

See “Risk Factors” and other information included in this prospectus for a discussion of factors that you should carefully consider before deciding whether to invest in shares of our common stock.

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Dividend policy

We have a history of paying dividends to our stockholders when sufficient cash is available, and we currently intend to pay dividends in the future after this offering. Any determination to pay dividends on our capital stock in the future will be at the discretion of our board of directors, subject to applicable laws and the provisions of our amended and restated certificate of incorporation (including those relating to the payment of dividends on our convertible preferred stock), and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. In addition, the terms of our credit facilities contain restrictions on our ability to pay dividends. See “Dividend Policy.”

The number of shares of common stock to be outstanding immediately following this offering gives effect to a -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part, and includes (i) shares of our common stock outstanding as of , 2014, and (ii) shares of common stock offered by us in connection with this offering, and excludes (on a post-stock split basis):

•

million shares of restricted stock outstanding as of , 2014 under our 2008 Restricted Stock Plan;

•

million shares of common stock issuable upon exercise of options outstanding as of , 2014 at a weighted average exercise price of $ per share; and

•

million shares of common stock reserved for future issuance under our 2013 Stock Option Plan.

Unless otherwise indicated, all information in this prospectus assumes the following:

•

a -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part;

•

no exercise by the underwriters of their option to purchase additional shares;

•

the filing of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior to the closing of this offering; and

•

an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus.

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Summary Consolidated Financial Data

The summary consolidated financial data presented below as of March 31, 2013 and 2014 and for fiscal years 2012, 2013 and 2014 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data presented below as of March 31, 2012 have been derived from our audited consolidated financial statements which are not included in this prospectus.

The results indicated below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read this data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This summary consolidated financial data does not reflect the earnings per share and dividends per share impact of our -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.


	Fiscal Year Ended March 31,
(Amounts in thousands, except per share data)	2012			2013			2014
Consolidated statement of income data:
Net sales	$	1,013,756		$	1,017,041		$	1,069,009
Cost of goods sold		818,398			807,730			856,118

Gross profit		195,358			209,311			212,891
Selling expenses		67,625			69,451			75,024
General and administrative expenses		65,927			67,712			78,478
Gain on sale of assets/ business		(44,634	)		(2,210	)		(5,338	)
Intangibles amortization		11,387			11,295			11,412

Income from operations		95,053			63,063			53,315
Interest expense		21,837			16,095			16,141
Other miscellaneous expense, net		2,425			283			133

Income before income taxes		70,791			46,685			37,041
Income tax expense		27,064			16,894			22,575
Equity in net (income) loss of unconsolidated affiliates		(704	)		(387	)		1,592

Net income		44,431			30,178			12,874
Less net income attributable to the noncontrolling interest		1,171			2,019			1,750

Net income attributable to ADS		43,260			28,159			11,124

Change in fair value of Redeemable Convertible Preferred Stock		(10,257	)		(5,869	)		(3,979	)
Dividends paid to Redeemable Convertible Preferred Stockholders		(668	)		(736	)		(10,139	)
Dividends paid to unvested restricted stockholders		(34	)		(52	)		(418	)

Net income (loss) available to common stockholders and participating securities		32,301			21,502			(3,412	)
Undistributed income (loss) allocated to participating securities		(3,241	)		(2,042	)		—

Net income (loss) available to common stockholders	$	29,060		$	19,460		$	(3,412	)

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	Fiscal Year Ended March 31,
(Amounts in thousands, except per share data)	2012		2013		2014
Weighted average common shares outstanding:
Basic		9,835		9,921		10,044
Diluted		9,996		10,038		10,044
As adjusted — Basic ⁽¹⁾		9,835		9,921		10,044
As adjusted — Diluted ⁽¹⁾		9,996		10,038		10,138
Net income (loss) per share:
Basic	$	2.95	$	1.96	$	(0.34	)
Diluted	$	2.91	$	1.94	$	(0.34	)
As adjusted — Basic ⁽¹⁾	$	3.88	$	2.48	$	0.06
As adjusted — Diluted ⁽¹⁾	$	3.81	$	2.45	$	0.06
Cash dividends declared per share	$	0.44	$	0.48	$	7.91


	Fiscal Year Ended March 31,
(Amounts in thousands, except percentages)	2012			2013			2014
Other financial data:
Capital expenditures	$	26,467		$	40,004		$	40,288
Adjusted EBITDA ⁽²⁾		116,873			129,759			147,009
Adjusted EBITDA margin ⁽³⁾		11.5	%		12.8	%		13.8	%


	As of March 31,
(Amounts in thousands)	2012			2013			2014
Consolidated balance sheet data:
Cash	$	2,082		$	1,361		$	3,931
Working capital ⁽⁴⁾		208,268			220,276			263,907
Total assets		905,028			907,739			937,595
Long-term debt		370,672			349,990			454,048
Total liabilities		615,314			585,115			691,980
Total mezzanine equity ⁽⁵⁾		557,563			608,346			642,951
Total stockholders’ equity		(267,849	)		(285,722	)		(397,336	)
Total mezzanine equity and stockholders’ equity		289,714			322,624			245,615


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012			2013			2014
Statement of cash flows data:
Net cash provided by operating activities	$	56,997		$	68,215		$	62,122
Net cash (used in) investing activities		(35,833	)		(47,199	)		(41,767	)
Net cash (used in) financing activities		(21,233	)		(21,737	)		(17,712	)

(1)

Net Income Per Share As Adjusted — Basic and Diluted, which are non-GAAP measures, have been presented in this prospectus as supplemental measures of financial performance that are not required by, or presented in accordance with generally accepted accounting principles or GAAP. As described elsewhere in this prospectus, upon completion of this offering, the redemption rights associated with these shares, which require them to be classified as mezzanine equity, will be no longer in effect and, as such, we anticipate reclassifying these balances to total stockholders’ equity upon the completion of this offering. We calculate Net Income Per Share As Adjusted — Basic, and the corresponding Weighted Average Common Shares Outstanding As Adjusted — Basic, by adjusting our historical net income per share and weighted average common shares outstanding amounts for the reclassification of Redeemable Convertible Preferred Stock from mezzanine equity to total stockholders’ equity in order to present historical amounts as if this reclassification occurred as of the beginning of the earliest period presented.

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To effect this adjustment, we have (1) removed the adjustment for the change in fair value of Redeemable Convertible Preferred Stock classified as mezzanine equity from the numerator of the Basic Net Income Per Share computation, and (2) made a corresponding adjustment to the amount allocated to participating securities under the two-class earnings per share computation method.

We have also made adjustments to Net Income Per Share as Adjusted – Diluted, and the corresponding Weighted Average Common Shares Outstanding As Adjusted – Diluted, to assume share settlement of the Redeemable Convertible Preferred Stock to the extent that the if-converted computation method is more dilutive than the two-class computation method.

Net Income Per Share As Adjusted — Basic and Diluted are included in this prospectus because they are key metrics used by management and our board of directors to assess our financial performance. Net Income Per Share As Adjusted — Basic and Diluted are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

The following table presents a reconciliation of Net Income Per Share As Adjusted — Basic and Diluted, and the corresponding Weighted Average Common Shares Outstanding As Adjusted — Basic and Diluted to our historical net income per share and corresponding historical weighted average common share amounts, the most comparable GAAP measure, for each of the periods indicated.


	Fiscal Year Ended March 31,
(Amounts in thousands, except per share data)	2012			2013			2014
Net Income Per Share As Adjusted — Basic
Net income (loss) available to common stockholders	$	29,060		$	19,460		$	(3,412	)
Adjustment for:
Change in fair value of Redeemable Convertible Preferred Stock		10,257			5,869			3,979
Undistributed income allocated to participating securities		(1,189	)		(716	)		—

Net income available to common stockholders used to calculate Net Income Per Share As Adjusted — Basic	$	38,128		$	24,613		$	567

Weighted average common shares outstanding:
Basic		9,835			9,921			10,044
As adjusted — Basic		9,835			9,921			10,044
Net Income Per Share As Adjusted — Diluted
Net income available to common stockholders used to calculate Net Income Per Share As Adjusted — Basic and Diluted		38,128			24,613			567

Weighted average common shares outstanding
Diluted		9,996			10,038			10,044
Assumed exercise of stock options		—			—			94

As adjusted — Diluted		9,996			10,038			10,138
Net income (loss) per share:
As adjusted — Basic	$	3.88		$	2.48		$	0.06
As adjusted — Diluted	$	3.81		$	2.45		$	0.06

(2)

EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, have been presented in this prospectus as supplemental measures of financial performance that are not required by, or presented in accordance with generally accepted accounting principles or GAAP. We calculate EBITDA as net income attributable to ADS before interest, income taxes, depreciation and amortization. We calculate Adjusted EBITDA as EBITDA before stock based compensation expense, non-cash charges and certain other expenses.

EBITDA and Adjusted EBITDA are included in this prospectus because they are key metrics used by management and our board of directors to assess our financial performance. EBITDA and Adjusted EBITDA are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. In addition to covenant compliance and executive performance evaluations, we use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures.

EBITDA and Adjusted EBITDA are not GAAP measures of our financial performance or liquidity and should not be considered as alternatives to net income as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. EBITDA and Adjusted EBITDA contain certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as stock based compensation expense, derivative fair value adjustments, and foreign currency transaction losses. Our presentation of Adjusted EBITDA should not be construed

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to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using EBITDA and Adjusted EBITDA supplementally. Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to Net income, the most comparable GAAP measure, for each of the periods indicated.


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012			2013			2014
Net income attributable to ADS	$	43,260		$	28,159		$	11,124
Depreciation and amortization ^(a)		59,356			56,926			57,454
Interest expense		21,837			16,095			16,141
Income tax expense		27,064			16,894			22,575

EBITDA		151,517			118,074			107,294
Derivative fair value adjustments ^(b)		2,315			(4	)		(53	)
Foreign currency transaction losses ^(c)		378			1,085			845
Gain on sale of Septic Chamber business ^(d)		(44,634	)		—			—
Unconsolidated affiliates interest and tax ^(e)		915			729			204
Management fee to minority interest holder JV ^(f)		—			—			1,098
Special dividend compensation		—			—			22,624
Contingent consideration remeasurement		—			—			259
Stock based compensation ^(g)		1,425			2,592			5,287
ESOP deferred stock based compensation ^(h)		4,957			7,283			7,891
Transaction costs ⁽ⁱ⁾		—			—			1,560

Adjusted EBITDA	$	116,873		$	129,759		$	147,009

(a)

Includes our proportionate share of depreciation and amortization expense of $985, $1,321 and $1,556 related to our South American Joint Venture and our BaySaver Joint Venture, which amounts are included in equity in net income of unconsolidated affiliates in our consolidated statements of income for fiscal years 2012, 2013 and 2014, respectively. Depreciation and amortization expense for fiscal year 2012 also includes a charge of $3,200 related to the impairment of one of our trademarks.

(b)

Represents the non-cash gains and losses arising from changes in mark-to-market values for derivative contracts related to diesel fuel and interest rate swaps. The impact of resin physical and financial derivatives is included in cost of goods sold.

(c)

Represents the gains and losses incurred on purchases, sales and intercompany loans and dividends denominated in non-functional currencies.

(d)

Represents a gain recognized on the sale of our septic chamber business in January 2012.

(e)

Represents our proportional share of income taxes and interest related to our South American Joint Venture and our BaySaver Joint Venture, which are accounted for under the equity method of accounting.

(f)

Represents management fee paid to a minority interest holder of a consolidated subsidiary.

(g)

Represents the non-cash stock based compensation cost related to our stock options and restricted stock awards.

(h)

Represents the non-cash stock based compensation expense attributable to the shares of convertible preferred stock allocated to employee ESOP accounts during the applicable period.

(i)

Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with our recent debt refinancing and in connection with this offering.

(3)	Adjusted EBITDA margin for any period represents Adjusted EBITDA as a percentage of net sales for that period.

(4)	Working capital is the difference between our current assets and current liabilities. Working capital is an indication of liquidity and potential need for short-term funding.

(5)

Our mezzanine equity consists of the Redeemable Convertible Preferred Stock held by our ESOP and Redeemable Common Stock held by certain stockholders who have certain rights associated with such shares, which rights are considered for purposes of GAAP to be a redemption right, which is beyond our control. See Note 16, Mezzanine Equity, within our consolidated financial statements included elsewhere in this prospectus for further information regarding the accounting treatment for our mezzanine equity. Upon completion of this offering, the redemption rights associated with these shares, which require them to be classified in mezzanine equity, will be no longer be in effect. As a result, we anticipate reclassifying these balances to total stockholders’ equity upon the completion of this offering.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. Before you make your investment decision, you should carefully consider the risks described below and the other information contained in this prospectus, including our consolidated financial statements and the related notes. If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could be materially adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business

Fluctuations in the price and availability of resins, our principal raw materials, and our inability to obtain adequate supplies of resins from suppliers and pass on resin price increases to customers could adversely affect our business, financial condition, results of operations and cash flows.

The principal raw materials that we use in our high performance thermoplastic corrugated pipe and Allied Products are virgin and recycled resins. Our ability to operate profitably depends, to a large extent, on the markets for these resins. In particular, as resins are derived either directly or indirectly from crude oil derivatives and natural gas liquids, resin prices fluctuate substantially as a result of changes in crude oil and natural gas prices, changes in existing refining capabilities and the capacity of resin suppliers. The petrochemical industry historically has been cyclical and volatile. The cycles are generally characterized by periods of tight supply, followed by periods of oversupply, primarily resulting from significant capacity additions. For example, resin prices have increased since 2010 due to increased demand in the broader economy. The weighted average market cost for the types of resin that we use increased by approximately 0.9% and 6.7% for fiscal years 2013 and 2014, respectively. Unanticipated changes in and disruptions to existing refining capacities could also significantly increase resin prices, often within a short period of time, even if crude oil and natural gas prices remain low.

Our ability to offer our core products depends on our ability to obtain adequate resins, which we purchase directly from major petrochemical and chemical suppliers. We have long-standing relationships as well as supply contracts with some of these suppliers but we have no fixed-price contracts with any of our major suppliers. Prices are typically negotiated on a continuous basis. We have implemented a limited resin price hedging program which has historically covered less than 50% of our virgin resin purchases. The loss of, or substantial decrease in the availability of, raw materials from our suppliers, or the failure by our suppliers to continue to provide us with raw materials on commercially reasonable terms, or at all, could adversely affect our business, financial condition, results of operations and cash flows. In addition, supply interruptions could arise from labor disputes or weather conditions affecting supplies or shipments, transportation disruptions or other factors beyond our control. A disruption in the timely availability of raw materials from our key suppliers would result in a decrease in our revenues and profitability.

Our ability to maintain profitability heavily depends on our ability to pass through to our customers the full amount of any increase in raw material costs, which are a large portion of our overall product costs. We may be unable to do so in a timely manner, or at all, due to competition in the markets in which we operate. In addition, certain of our largest customers historically have exerted significant pressure on their outside suppliers to keep prices low because of their market share. If increases in the cost of raw materials cannot be passed on to our customers, or the duration of time associated with a pass through becomes extended, our business, financial condition, results of operations and cash flows will be adversely affected.

Any disruption or volatility in general business and economic conditions in the markets in which we operate could have a material adverse effect on the demand for our products and services.

The markets in which we operate are sensitive to general business and economic conditions in the United States and worldwide, including availability of credit, interest rates, fluctuation in capital and business and consumer confidence. The capital and credit markets have in recent years been experiencing significant volatility

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and disruption. These conditions, combined with price fluctuations in crude oil derivatives and natural gas liquids, declining business and consumer confidence and increased unemployment, precipitated an economic slowdown and severe recession in recent years. The difficult conditions in these markets and the overall economy affect our business in a number of ways. For example:

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The slowdown and volatility of the United States economy in general is having an adverse effect on our sales that are dependent on the non-residential construction market. According to the U.S. Census Bureau, actual non-residential construction put-in-place in the United States during 2013 remained 13.5% lower than 2009 levels. Continued uncertainty about current economic conditions will continue to pose a risk to our business units that serve the non-residential construction market, as participants in this industry may postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a continued material adverse effect on the demand for our products and services.

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The homebuilding industry has undergone a significant decline from its peak in 2005. While new housing starts demonstrated an annual growth rate of 16% from 2010 to 2013, current levels remain substantially below the long-term average of 1.5 million starts since the U.S. Census Bureau began reporting the data in 1959.

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The mortgage markets continue to experience disruption and reduced availability of mortgages for potential homebuyers due to more restrictive standards to qualify for mortgages, including with respect to new home construction loans. The multi-year downturn in the homebuilding industry resulted in a substantial reduction in demand for our products and services in this market, which in turn had a significant adverse effect on our financial condition and results of operations during the period from 2008 to 2013, as compared to peak levels.

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Our business depends to a great extent upon general activity levels in the agriculture market. Changes in corn production, soybean production, farm income, farmland value and the level of farm output in the geographic locations in which we operate are all material factors that could adversely affect the agriculture market and result in a decrease in the amount of products that our customers purchase. The nature of the agriculture market is such that a downturn in demand can occur suddenly, resulting in excess inventories, un-utilized production capacity and reduced prices for pipe products. These downturns may be prolonged and our revenue and profitability would be harmed.

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Demand for our products and services depends to a significant degree on spending on infrastructure, which is inherently cyclical. Infrastructure spending is affected by a variety of factors beyond our control, including interest rates, availability and commitment of public funds for municipal spending and highway spending and general economic conditions. Our products sales may be adversely impacted by budget cuts by governments, including as a result of lower than anticipated tax revenues.

All of our markets are sensitive to changes in the broader economy. Downturns or lack of substantial improvement in the economy in any region in which we operate have adversely affected and could continue to adversely affect our business, financial condition and results of operations. While we operate in many markets, our business is particularly impacted by changes in the economies of the United States, Canada and Mexico, which represented approximately 87.5%, 4.9% and 5.9%, respectively, of our net sales for fiscal year 2014 and collectively represented approximately 98.3% of our net sales for fiscal year 2014.

We cannot predict the duration of current economic conditions, or the timing or strength of any future recovery of activities in our markets. Continued weakness in the market in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows. We may have to close under-performing facilities from time to time as warranted by general economic conditions and/or weakness in the markets in which we operate. In addition to a reduction in demand for our products, these factors may also reduce the price we are able to charge for our products and restrict our ability to pass raw material cost increases to our customers. This, combined with an increase in excess capacity, will negatively impact our profitability, cash flows and our financial condition, generally.

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Demand for our products and services could decrease if we are unable to compete effectively, and our success depends largely on our ability to convert current demand for competitive products into demand for our products.

We compete with both manufacturers of high performance thermoplastic corrugated pipe and manufacturers of alternative products, such as concrete, steel and PVC pipe products, on the basis of a number of considerations, including product characteristics such as durability, design, ease of installation, price on a price-to-value basis and service. In particular, we compete on a global, national and local basis with pipe products made of traditional materials which our high performance thermoplastic corrugated pipe products are designed to replace. For example, our N-12 and SaniTite HP products face competition from concrete, steel and PVC pipe products in the small- and large-diameter size segments of the market.

Our ability to successfully compete and grow depends largely on our ability to continue to convert the current demand for concrete, steel and PVC pipe products into demand for our high performance thermoplastic corrugated pipe and Allied Products. Our thermoplastic pipe typically has an installed cost advantage of approximately 20% over concrete pipe. However, depending upon certain factors such as the size of the pipe, the geography of a particular location and then-existing raw material costs, the initial cost of our thermoplastic pipe may be higher than the initial cost of alternative products such as concrete, steel and PVC pipe products. To increase our market share, we will need to increase material conversion by educating our customers about the value of our products in comparison to existing alternatives, particularly on an installed cost basis, working with government agencies to expand approvals for our products and working with civil engineering firms which may influence the specification of our products on construction projects. No assurance can be given that our efforts to increase or maintain the current rate of material conversion will be successful, and our failure to do so would have a material adverse effect on our business, financial condition, results of operations and cash flows.

We also expect that new competitors may develop over time. No assurance can be given that we will be able to respond effectively to such competitive pressures. Increased competition by existing and future competitors could result in reductions in sales, prices, volumes and gross margins that would materially adversely affect our business, financial condition, results of operations and cash flows. Furthermore, our success will depend, in part, on our ability to maintain our market share and gain market share from competitors.

Certain of our competitors have financial and other resources that are greater than ours and may be better able to withstand price competition, especially with respect to traditional products. In addition, consolidation by industry participants could result in competitors with increased market share, larger customer bases, greater diversified product offerings and greater technological and marketing expertise, which would allow them to compete more effectively against us. Moreover, our competitors may develop products that are superior to our products or may adapt more quickly to new technologies or evolving customer requirements. Technological advances by our competitors may lead to new manufacturing techniques and make it more difficult for us to compete. In many markets in which we operate there are no significant entry barriers that would prevent new competitors from entering the market, especially on the local level, or existing competitors from expanding in the market. In addition, because we do not have long-term arrangements with many of our customers, these competitive factors could cause our customers to cease purchasing our products.

In addition, our contracts with municipalities are often awarded and renewed through periodic competitive bidding. We may not be successful in obtaining or renewing these contracts on financially attractive terms or at all, which could adversely affect our business, financial condition, results of operations and cash flows.

Our results of operations could be adversely affected by the effects of weather.

Although weather patterns affect our operating results throughout the year, adverse weather historically has reduced construction activity in our third and fourth fiscal quarters. In contrast, our highest volume of net sales historically has occurred in our first and second fiscal quarters.

Most of our business units experience seasonal variation as a result of the dependence of our customers on suitable weather to engage in construction projects. Generally, during the winter months, construction activity

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declines due to inclement weather, frozen ground and shorter daylight hours. For example, during the spring of 2013 and 2014, the extremely cold weather significantly reduced the level of construction activities in the United States, thereby impacting our revenues. In addition, to the extent that hurricanes, severe storms, floods, other natural disasters or similar events occur in the geographic regions in which we operate, our results of operations may be adversely affected. For example, Hurricane Andrew in Florida in 1992 and the extensive flooding of the Mississippi River in 2011 resulted in temporary interruption in business activity in these areas. We anticipate that fluctuations of our operation results from period to period due to seasonality will continue in the future.

The loss of any of our significant customers could adversely affect our business, financial condition, results of operations and cash flows.

Our 10 largest customers in the United States generated approximately 46.7% of our domestic net sales in fiscal year 2014. We cannot guarantee that we will maintain or improve our relationships with these customers or that we will continue to supply these customers at historical levels. Because we do not have long-term arrangements with many of our customers, such customers may cease purchasing our products without notice or upon short notice to us. During the economic downturn, some of our customers reduced their operations. For example, some homebuilder customers exited or severely curtailed building activity in certain of our markets. There is no assurance that our customers will increase their activity level or return it to historic levels. A slow economic recovery could continue to have material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, consolidation among customers could also result in a loss of some of our present customers to our competitors. The loss of one or more of our significant customers, a significant customer’s decision to purchase our products in significantly lower quantities than they have in the past, or deterioration in our relationship with any of them could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The majority of our net sales are credit sales which are made primarily to customers whose ability to pay is dependent, in part, upon the economic strength of the industry and geographic areas in which they operate, and the failure to collect monies owed from customers could adversely affect our financial condition.

The majority of our net sales volume is facilitated through the extension of credit to our customers whose ability to pay is dependent, in part, upon the economic strength of the industry in the areas where they operate. Our business units offer credit to customers, either through unsecured credit that is based solely upon the creditworthiness of the customer, or secured credit for materials sold for a specific job where the security lies in lien rights associated with the material going into the job. The type of credit offered depends both on the financial strength of the customer and the nature of the business in which the customer is involved. End users, resellers and other non-contractor customers generally purchase more on unsecured credit than secured credit. The inability of our customers to pay off their credit lines in a timely manner, or at all, would adversely affect our business, financial condition, results of operations and cash flows. Furthermore, our collections efforts with respect to non-paying or slow-paying customers could negatively impact our customer relations going forward.

Because we depend on the creditworthiness of certain of our customers, if the financial condition of our customers declines, our credit risk could increase. Significant contraction in our markets, coupled with tightened credit availability and financial institution underwriting standards, could adversely affect certain of our customers. Should one or more of our larger customers declare bankruptcy, it could adversely affect the collectability of our accounts receivable, bad debt reserves and net income.

Our international operations expose us to political, economic and regulatory risks not normally faced by businesses that operate only in the United States.

International operations are exposed to different political, economic and regulatory risks that are not faced by businesses that operate solely in the United States. Some of our operations are outside the United States, with

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manufacturing and distribution facilities in Canada and several Latin American countries. Our international operations are subject to risks similar to those affecting our operations in the United States in addition to a number of other risks, including:

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difficulties in enforcing contractual and intellectual property rights;

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impositions or increases of withholding and other taxes on remittances and other payments by subsidiaries and affiliates;

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exposure to different legal standards;

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fluctuations in currency exchange rates;

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impositions or increases of investment and other restrictions by foreign governments;

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the requirements of a wide variety of foreign laws;

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political and economic instability;

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terrorist acts;

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war; and

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difficulties in staffing and managing operations, particularly in remote locations.

As a result of our international operations we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws.

The U.S. Foreign Corrupt Practices Act, or the FCPA, and similar foreign anti-corruption laws generally prohibit companies and their intermediaries from making improper payments or providing anything of value to influence foreign government officials for the purpose of obtaining or retaining business or obtaining an unfair advantage. Recent years have seen a substantial increase in the global enforcement of anti-corruption laws, with more frequent voluntary self-disclosures by companies, aggressive investigations and enforcement proceedings by both the U.S. Department of Justice and the U.S. Securities and Exchange Commission, or SEC, resulting in record fines and penalties, increased enforcement activity by non-U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals.

We have operations in Canada as well as existing joint ventures in Mexico, Central America and South America. Our internal policies provide for compliance with all applicable anti-corruption laws for both us and for our joint venture operations. Our continued operation and expansion outside the United States, including in developing countries, could increase the risk of such violations in the future. Despite our training and compliance programs, we cannot assure you that our internal control policies and procedures always will protect us from unauthorized reckless or criminal acts committed by our employees, agents or joint venture partners. In the event that we believe or have reason to believe that our employees, agents or joint venture partners have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management. Violations of these laws may result in severe criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on our reputation, financial condition, results of operations and cash flows.

Conducting a portion of our operations through joint ventures exposes us to risks and uncertainties, many of which are outside of our control.

With respect to our existing joint ventures in Mexico, Central America and South America, any differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major issues. We also cannot control the actions of our joint venture partners, including any nonperformance, default or bankruptcy of our joint venture partners. As a result, we may be unable to control the quality of products

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produced by the joint ventures or achieve consistency of product quality as compared with our other operations. In addition to net sales and market share, this may have a material negative impact on our brand and how it is perceived thereafter. Moreover, if our partners also fail to invest in the joint venture in the manner that is anticipated or otherwise fail to meet their contractual obligations, the joint ventures may be unable to adequately perform and conduct their respective operations, requiring us to make additional investments or perform additional services to ensure the adequate performance and delivery of products and/or services to the joint ventures’ customers, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may not be able to successfully expand into new product markets.

We may expand into new product markets based on our existing manufacturing, design and engineering capabilities and services. Our business depends in part on our ability to identify future products and product lines that complement existing products and product lines and that respond to our customers’ needs. We may not be able to compete effectively unless our product selection keeps up with trends in the markets in which we compete or trends in new products. In addition, our ability to integrate new products and product lines into our distribution network could impact our ability to compete. Furthermore, the success of new products and new product lines will depend on market demand and there is a risk that new products and new product lines will not deliver expected results, which could negatively impact our future sales and results of operations.

We may not be able to successfully expand into new geographic markets.

Our expansion into new geographic markets may present competitive, distribution and regulatory challenges that differ from current ones. We may be less familiar with the target customers and may face different or additional risks, as well as increased or unexpected costs, compared to existing operations. Expansion into new geographic markets may also bring us into direct competition with companies with whom we have little or no past experience as competitors. To the extent we rely upon expansion into new geographic markets for growth and do not meet the new challenges posed by such expansion, our future sales growth could be negatively impacted, our operating costs could increase, and our business operations and financial results could be adversely affected.

We may not achieve the acquisition component of our growth strategy.

Acquisitions may continue to be an important component of our growth strategy; however, there can be no assurance that we will be able to continue to grow our business through acquisitions as we have done historically or that any businesses acquired will perform in accordance with expectations or that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove to be correct. Future acquisitions may result in the incurrence of debt and contingent liabilities, an increase in interest expense and amortization expense and significant charges relative to integration costs. Our strategy could be impeded if we do not identify suitable acquisition candidates and our financial condition and results of operations will be adversely affected if we are unable to properly evaluate acquisition targets.

Acquisitions involve a number of special risks, including:

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problems implementing disclosure controls and procedures for the newly acquired business;

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unforeseen difficulties extending internal control over financial reporting and performing the required assessment at the newly acquired business;

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potential adverse short-term effects on operating results through increased costs or otherwise;

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diversion of management’s attention and failure to recruit new, and retain existing, key personnel of the acquired business;

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failure to successfully implement infrastructure, logistics and systems integration;

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our business growth could outpace the capability of our systems; and

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the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities, any of which could have a material adverse effect on our business, financial condition and results of operations.

In addition, we may not be able to obtain financing necessary to complete acquisitions on attractive terms or at all.

Increased fuel and energy prices, and our inability to obtain sufficient quantities of fuel to operate our in-house delivery fleet, could adversely affect our business, financial condition, results of operations and cash flows.

Energy and petroleum prices have fluctuated significantly in recent years. Prices and availability of petroleum products are subject to political, economic and market factors that are outside our control. Political events in petroleum-producing regions as well as hurricanes and other weather-related events may cause the price of fuel to increase.

We consume a large amount of energy and petroleum products in our operations, including the manufacturing process and delivering a significant volume of products to our customers by our in-house fleet. While we have implemented a diesel hedging program covering approximately 50% of our in-house fleet to mitigate against higher fuel prices, our operating profit will be adversely affected if we are unable to obtain the energy and fuel we require or to fully offset the anticipated impact of higher energy and fuel prices through increased prices or surcharges to our customers or through other hedging strategies. If shortages occur in the supply of energy or necessary petroleum products and we are not able to pass along the full impact of increased energy or petroleum prices to our customers, our business, financial condition, results of operations and cash flows would be adversely affected.

We have substantial fixed costs and, as a result, our income from operations is sensitive to changes in our net sales.

A significant portion of our expenses are fixed costs (including personnel). For fiscal years 2012, 2013 and 2014, domestic fixed costs were 26.3%, 27.2% and 26.4%, respectively, as a percentage of domestic net sales. Fixed costs do not fluctuate with net sales. Consequently, a percentage decline in our net sales could have a greater percentage effect on our income from operations if we do not act to reduce personnel or take other cost reduction actions. Any decline in our net sales would cause our profitability to be adversely affected. Moreover, a key element of our strategy is managing our assets, including our substantial fixed assets, more effectively, including through sales or other disposals of excess assets. Our failure to rationalize our fixed assets in the time, and within the costs, we expect could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business is subject to risks associated with manufacturing processes.

We internally manufacture our own products at our facilities. While we maintain insurance covering our manufacturing and production facilities and have significant flexibility to manufacture and ship our own products from various facilities, a catastrophic loss of the use of certain of our facilities due to accident, fire, explosion, labor issues, weather conditions, other natural disaster or otherwise, whether short or long-term, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Unexpected failures of our equipment and machinery may result in production delays, revenue loss and significant repair costs, injuries to our employees, and customer claims. Any interruption in production capability may limit our ability to supply enough products to customers and may require us to make large capital

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expenditures to remedy the situation, which could have a negative impact on our profitability and cash flows. Our business interruption insurance may not be sufficient to offset the lost revenues or increased costs that we may experience during a disruption of our operations.

We provide product warranties that could expose us to claims, which could in turn damage our reputation and adversely affect our business, financial condition, results of operations and cash flows.

We generally provide limited product warranties on our products against defects in materials and workmanship in normal use and service. Most of our pipe products have a warranty that is not limited in duration. The warranty period for other products such as our StormTech chambers, our Inserta Tee product line, our BaySaver product line and our FleXstorm inlet protection systems is generally one year. Estimating the required warranty reserves requires a high level of judgment. Management estimates warranty reserves, based in part upon historical warranty costs, as a proportion of sales by product line. Management also considers various relevant factors, including its stated warranty policies and procedures, as part of its evaluation of its liability. Because warranty issues may surface later in the product life cycle, management continues to review these estimates on a regular basis and considers adjustments to these estimates based on actual experience compared to historical estimates. Although management believes that our warranty reserves at March 31, 2014 are adequate, actual results may vary from these estimates.

The nature of our business exposes us to construction defect and product liability claims as well as other legal proceedings.

We are exposed to construction defect and product liability claims relating to our various products if our products do not meet customer expectations. Such liabilities may arise out of the quality of raw materials we purchase from third-party suppliers, over which we do not have direct control. We also operate a large fleet of trucks and other vehicles and therefore face the risk of traffic accidents.

While we currently maintain insurance coverage to address a portion of these types of liabilities, we cannot make assurances that we will be able to obtain such insurance on acceptable terms in the future, if at all, or that any such insurance will provide adequate coverage against potential claims. Further, while we intend to seek indemnification against potential liability for products liability claims from relevant parties, we cannot guarantee that we will be able to recover under any such indemnification agreements. Product liability claims can be expensive to defend and can divert the attention of management and other personnel for significant time periods, regardless of the ultimate outcome. An unsuccessful product liability defense could be highly costly and accordingly result in a decline in revenues and profitability. In addition, even if we are successful in defending any claim relating to the products we distribute, claims of this nature could negatively impact customer confidence in us and our products.

From time to time, we are also involved in government inquiries and investigations, as well as consumer, employment, tort proceedings and other litigation. We cannot predict with certainty the outcomes of these legal proceedings and other contingencies, including potential environmental remediation and other proceedings commenced by government authorities. The outcome of some of these legal proceedings and other contingencies could require us to take actions which would adversely affect our operations or could require us to pay substantial amounts of money. Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources from other matters.

Because our business is working capital intensive, we rely on our ability to manage our supply purchasing and customer credit policies.

Our operations are working capital intensive, and our inventories, accounts receivable and accounts payable are significant components of our net asset base. We manage our inventories and accounts payable through our purchasing policies and our accounts receivable through our customer credit policies. If we fail to adequately manage our supply purchasing or customer credit policies, our working capital and financial condition may be adversely affected.

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Our operations are affected by various laws and regulations in the markets in which we operate, and our failure to obtain or maintain approvals by municipalities, state departments of transportation, engineers and developers may affect our results of operations.

Our operations are principally affected by various statutes, regulations and laws in the United States, Canada and Latin America. While we are not engaged in a regulated industry, we are subject to various laws applicable to businesses generally, including laws affecting land usage, zoning, the environment, health and safety, transportation, labor and employment practices (including pensions), competition, immigration and other matters. Additionally, approvals by municipalities, state departments of transportation, engineers and developers may affect the products our customers are allowed to use, and, consequently, failure to obtain or maintain such approvals may affect the saleability of our products. Building codes may also affect the products our customers are allowed to use, and, consequently, changes in building codes may also affect the saleability of our products. Changes in applicable regulations governing the sale of some of our products could increase our costs of doing business. In addition, changes to applicable tax laws and regulations could increase our costs of doing business. We cannot provide assurance that we will not incur material costs or liabilities in connection with regulatory requirements.

We deliver products to many of our customers through our own fleet of vehicles. The U.S. Department of Transportation, or DOT, regulates our operations in domestic interstate commerce. We are subject to safety requirements governing interstate operations prescribed by the DOT. Vehicle dimensions and driver hours of service also remain subject to both federal and state regulation. More restrictive limitations on vehicle weight and size, trailer length and configuration, or driver hours of service could increase our costs, which, if we are unable to pass these cost increases on to our customers, would reduce our gross margins and net income (loss) and increase our selling, general and administrative expenses.

We cannot predict whether future developments in law and regulations concerning our business units will affect our business, financial condition and results of operations in a negative manner. Similarly, we cannot assess whether our business units will be successful in meeting future demands of regulatory agencies in a manner which will not materially adversely affect our business, financial condition, results of operations and cash flows.

Interruptions in the proper functioning of IT systems could disrupt operations and cause unanticipated increases in costs or decreases in revenues, or both.

Because we use our information systems to, among other things, manage inventories and accounts receivable, make purchasing decisions and monitor our results of operations, the proper functioning of our IT systems is important to the successful operation of our business. Although our IT systems are protected through physical and software safeguards and remote processing capabilities exist, IT systems are still vulnerable to natural disasters, power losses, unauthorized access, telecommunication failures and other problems. If critical IT systems fail, or are otherwise unavailable, our ability to process orders, track credit risk, identify business opportunities, maintain proper levels of inventories, collect accounts receivable and pay expenses and otherwise manage our business units would be adversely affected.

Management uses information systems to support decision making and to monitor business performance. We may fail to generate accurate financial and operational reports essential for making decisions at various levels of management. Failure to adopt systematic procedures to maintain quality IT general controls could disrupt our business. In addition, if we do not maintain adequate controls such as reconciliations, segregation of duties and verification to prevent errors or incomplete information, our ability to operate our business could be limited.

Third-party service providers are responsible for managing a significant portion of our IT systems. Our business and results of operations may be adversely affected if the third-party service provider does not perform satisfactorily. Additionally, there is no guarantee that we will continue to have access to these third-party IT systems after our current license agreements expire, and, if we do not obtain licenses to use effective replacement IT systems, our financial condition and operating results could be adversely affected.

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The implementation of our technology initiatives could disrupt our operations in the near term, and our technology initiatives might not provide the anticipated benefits or might fail.

We have made, and will continue to make, significant technology investments in each of our business units and in our administrative functions. Our technology initiatives are designed to streamline our operations to allow our associates to continue to provide high quality service to our customers and to provide our customers a better experience, while improving the quality of our internal control environment. The cost and potential problems and interruptions associated with the implementation of our technology initiatives could disrupt or reduce the efficiency of our operations in the near term. In addition, our new or upgraded technology might not provide the anticipated benefits, it might take longer than expected to realize the anticipated benefits or the technology might fail altogether.

We may experience a failure in or breach of our operational or information security systems, or those of our third-party service providers, as a result of cyber-attacks or information security breaches.

Information security risks have generally increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. A failure in or breach of our operational or information security systems, or those of our third-party service providers, as a result of cyber-attacks or information security breaches could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and/or cause losses. As a result, cyber security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us. As cyber threats continue to evolve, we may be required to expend additional significant resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities.

If we become subject to material liabilities under our self-insured programs, our financial results may be adversely affected.

We provide workers’ compensation, automobile and product/general liability coverage through a high deductible insurance program. In addition, we provide medical coverage to some of our employees through a self-insured preferred provider organization. Though we believe that we have adequate insurance coverage in excess of self-insured retention levels, our business, financial condition, results of operations and cash flows may be adversely affected if the number and severity of insurance claims increases.

We may see increased costs arising from health care reform.

In March 2010, the United States government enacted comprehensive health care reform legislation which, among other things, includes guaranteed coverage requirements, eliminates pre-existing condition exclusions and annual and lifetime maximum limits, restricts the extent to which policies can be rescinded and imposes new and significant taxes on health insurers and health care benefits. The legislation imposes implementation effective dates which began in 2010 and extend through 2020, and many of the changes require additional guidance from government agencies or federal regulations. Therefore, due to the phased-in nature of the implementation and the lack of interpretive guidance, it is difficult to determine at this time what impact the health care reform legislation will have on our financial results. Possible adverse effects of the health reform legislation include increased costs, exposure to expanded liability and requirements for us to revise ways in which we provide healthcare and other benefits to our employees. As a result, our business, financial condition, results of operations and cash flows could be materially adversely affected.

Our success depends upon our ability to control labor costs and to attract, train and retain highly-qualified employees and key personnel.

To be successful, we must attract, train and retain a large number of highly qualified employees while controlling related labor costs. Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates and health and other insurance costs. We compete with other businesses for these

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employees and invest significant resources in training and motivating them. There is no assurance that we will be able to attract or retain highly-qualified employees in the future, including, in particular, those employed by companies we acquire. None of our domestic employees are currently covered by collective bargaining or other similar labor agreements. However, if a number of our employees were to unionize, including in the wake of any future legislation that makes it easier for employees to unionize, the effect on us may be negative. Any inability by us to negotiate acceptable new contracts under any collective bargaining arrangements could cause strikes or other work stoppages, and new contracts could result in increased operating costs. If any such strikes or other work stoppages occur, or if employees become represented by a union, we could experience a disruption of our operations and higher labor costs. Labor relations matters affecting our suppliers of products and services could also adversely affect our business from time to time.

In addition, our business results of operations depend largely upon our chief executive officer and senior management team as well as our plant managers and sales personnel, including those of companies recently acquired, and their experience, knowledge of local market dynamics and specifications and long-standing customer relationships. We customarily sign executive responsibility agreements with certain key personnel who are granted restricted stock or stock options under our employee incentive compensation programs, which contain confidentiality and non-competition provisions. However, in certain jurisdictions, non-competition provisions may not be enforceable or may not be enforceable to their full extent. Our inability to retain or hire qualified plant managers or sales personnel at economically reasonable compensation levels would restrict our ability to grow our business, limit our ability to continue to successfully operate our business and result in lower operating results and profitability.

If we are unable to protect our intellectual property rights, or we infringe on the intellectual property rights of others, our ability to compete could be negatively impacted.

Our ability to compete effectively depends, in part, upon our ability to protect and preserve proprietary aspects of our intellectual property, which we attempt to do, both in the United States and in foreign countries, through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Because of the differences in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition.

We have applied for patent protection relating to certain existing and proposed products, processes and services. While we generally apply for patents in those countries where we primarily intend to make, have made, use, or sell patented products, we may not accurately predict all of the countries where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a later date. Furthermore, we cannot assure you that any of our patent applications will be approved. We also cannot assure you that the patents issuing as a result of our foreign patent applications will have the same scope of coverage as our United States patents. The patents we own could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Further, we cannot assure you that competitors will not infringe our patents, or that we will have adequate resources to enforce our patents.

We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we generally require applicable employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected.

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We rely on our trademarks, trade names and brand names to distinguish our products from the products of our competitors, and have registered or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks or that we will have adequate resources to enforce our trademarks. We also license third parties to use certain of our trademarks. In an effort to preserve our trademark rights, we enter into license agreements with these third parties which govern the use of our trademarks and which require our licensees to abide by quality control standards with respect to the goods and services that they provide under our trademarks. Although we make efforts to police the use of our trademarks by our licensees, we cannot assure you that these efforts will be sufficient to ensure that our licensees abide by the terms of their licenses. In the event that our licensees fail to do so, our trademark rights could be diluted.

Although we rely on copyright laws to protect the works of authorship (including software) created by us, we generally do not register the copyrights in any of our copyrightable works. Copyrights of United States origin must be registered before the copyright owner may bring an infringement suit in the United States. Furthermore, if a copyright of United States origin is not registered within three months of publication of the underlying work, the copyright owner is precluded from seeking statutory damages or attorneys’ fees in any United States enforcement action, and is limited to seeking actual damages and lost profits. Accordingly, if one of our unregistered copyrights of United States origin is infringed by a third party, we will need to register the copyright before we can file an infringement suit in the United States, and our remedies in any such infringement suit may be limited.

The misuse of our intellectual property rights by others could adversely impact our ability to compete, cause our net sales to decrease or otherwise harm our business. If it became necessary for us to resort to litigation to protect our intellectual property rights, any proceedings could be burdensome and costly, and we may not prevail.

Also, we cannot be certain that the products that we sell do not and will not infringe issued patents or other intellectual property rights of others. Further, we are subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us or our customers, whom we generally indemnify in connection with their use of the products that we manufacture. These claims could divert management’s attention and resources and may require us to initiate or defend protracted and costly litigation on behalf of ourselves or our customers, regardless of the merits of the claims. Should we be found liable for infringement, we may be required to enter into licensing agreements (if available on acceptable terms or at all) or pay damages and cease making or selling certain products. Moreover, we may need to redesign or sell different products to avoid future infringement liability. Any of the foregoing could cause us to incur significant costs, prevent us from selling our products or negatively impact our ability to compete.

Income tax payments may ultimately differ from amounts currently recorded by us. Future tax law changes may materially increase our prospective income tax expense.

We are subject to income taxation in many jurisdictions in the United States as well as foreign jurisdictions. Judgment is required in determining our worldwide income tax provision and, accordingly, there are many transactions and computations for which our final income tax determination is uncertain. We are routinely audited by income tax authorities in many tax jurisdictions. Although we believe the recorded tax estimates are reasonable, the ultimate outcome from any audit (or related litigation) could be materially different from amounts reflected in our income tax provisions and accruals. Future settlements of income tax audits may have a material effect on earnings between the period of initial recognition of tax estimates in the financial statements and the point of ultimate tax audit settlement. Additionally, it is possible that future income tax legislation in any jurisdiction to which we are subject may be enacted that could have a material impact on our worldwide income tax provision beginning with the period that such legislation becomes effective.

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We could incur significant costs in complying with environmental, health and safety laws or permits or as a result of satisfying any liability or obligation imposed under such laws or permits.

Our operations are subject to various federal, state, local and foreign environmental, health and safety laws and regulations. Among other things, these laws regulate the emission or discharge of materials into the environment, govern the use, storage, treatment, disposal and management of hazardous substances and wastes, protect the health and safety of our employees and the end users of our products, regulate the materials used in and the recycling of products and impose liability for the costs of investigating and remediating, and damages resulting from, present and past releases of hazardous substances. Violations of these laws and regulations, failure to obtain or maintain required environmental permits or non-compliance with any conditions contained in any environmental permit can result in substantial fines or penalties, injunctive relief, requirements to install pollution or other controls or equipment, civil and criminal sanctions, permit revocations and/or facility shutdowns. We could be held liable for the costs to address contamination of any real property we have ever owned, leased, operated or used, including as a disposal site. We could also incur fines, penalties, sanctions or be subject to third-party claims for property damage, personal injury or nuisance or otherwise as a result of violations of or liabilities under environmental laws in connection with releases of hazardous or other materials.

In addition, changes in, or new interpretations of, existing laws, regulations or enforcement policies, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future, including additional investigation or other obligations with respect to any potential health hazards of our products or business activities or the imposition of new permit requirements, may lead to additional compliance or other costs that could have material adverse effect on our business, financial condition, results of operations and cash flows.

Our failure to maintain effective disclosure controls and internal control over financial reporting could adversely affect our business, financial position and results of operations.

Upon completion of this offering, we will be required to evaluate the effectiveness of our disclosure controls and internal control over financial reporting on a periodic basis and publicly disclose the results of these evaluations and related matters, in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. These reporting and other obligations place significant additional demands on our management and administrative and operational resources, including our accounting resources, which could adversely affect our operations among other things. To comply with these requirements, we have upgraded, and are continuing to upgrade our systems, including information technology, implemented additional financial and management controls, reporting systems and procedures. We cannot be certain that we will be successful in maintaining adequate control over our financial reporting and financial processes. Furthermore, as we grow our business, our disclosure controls and internal controls will become more complex, and we may require significantly more resources to ensure that these controls remain effective. If we are unable to continue upgrading our financial and management controls, reporting systems, information technology and procedures in a timely and effective fashion, additional management and other resources may need to be devoted to assist in compliance with the disclosure and financial reporting requirements and other rules that apply to reporting companies, which could adversely affect our business, financial position and results of operations.

We have not been required to have and have not had our independent registered public accounting firm perform an evaluation of our internal control over financial reporting as of the end of our last fiscal year in accordance with the provisions of the Sarbanes-Oxley Act of 2002. Had our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act of 2002, additional control deficiencies may have been identified by our independent registered public accounting firm and those control deficiencies could have also represented one or more material weaknesses.

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Future changes in financial accounting standards may significantly change our reported results of operations.

In an exposure draft issued in August 2010 and revised in May 2013, the Financial Accounting Standards Board, or FASB, together with the International Accounting Standards Board, proposed a comprehensive set of changes in accounting for leases. The lease accounting model contemplated by these changes is a “right of use” model that assumes that each lease creates an asset (the lessee’s right to use the leased asset) and a liability (the future rent payment obligations) which should be reflected on a lessee’s balance sheet to fairly represent the lease transaction and the lessee’s related financial obligations. We conduct some of our operations under leases that are accounted for as operating leases, with no related assets and liabilities on our balance sheet. The proposed changes would require that substantially all of our operating leases be recognized as assets and liabilities on our balance sheet. The effective date has not been determined. Comments on the revised exposure draft were due by September 13, 2013. Changes in lease accounting rules or their interpretation, or changes in underlying assumptions, estimates or judgments by us could significantly change our reported or expected financial performance.

A change in our product mix could adversely affect our results of operations.

Our results may be affected by a change in our product mix on which our gross margin depends. Our Allied Products typically provide higher gross margin than our pipe products. Changes in our product mix may result from marketing activities to existing customers and needs communicated to us from existing and prospective customers. Our outlook, budgeting and strategic planning assume a certain product mix of sales. If actual results vary from this projected product mix of sales, our financial results could be negatively impacted.

We may be affected by global climate change or by legal, regulatory or market responses to such potential change.

Concern over climate change, including the impact of global warming, has led to significant federal, state, and international legislative and regulatory efforts to limit greenhouse gas, or GHG, emissions. For example, in the past several years, the U.S. Congress has considered various bills that would regulate GHG emissions. While these bills have not yet received sufficient Congressional support for enactment, some form of federal climate change legislation is possible in the future. Even in the absence of such legislation, the EPA, spurred by judicial interpretation of the Clean Air Act, has begun regulating GHG emissions following its issuance of the “Tailoring Rule” that determines which stationary sources require permits for greenhouse emissions. EPA has issued rules that require monitoring and reporting of annual GHG emissions, as well as performance standards for CO2 emissions from new fossil-fuel electric utility generating units. Thus far, EPA has addressed vehicle and mobile source emissions by implementing Renewable Fuel Standard regulations and by working with manufacturers to improve fuel efficiency in new vehicles. However, EPA has been directed by President Obama to develop and issue new fuel efficiency standards for medium- and heavy-duty vehicles by March 2016, especially diesel engine emissions, and this could impose substantial costs on us. These costs include an increase in the cost of the fuel and other energy we purchase and capital costs associated with updating or replacing our internal fleet of trucks and other vehicles in order to comply with application regulations. In addition, new laws or future regulation could directly and indirectly affect our customers and suppliers (through an increase in the cost of production or their ability to produce satisfactory products) and our business (through the impact on our inventory availability, cost of sales, operations or demands for the products we sell). Until the timing, scope and extent of any future regulation becomes known, we cannot predict its effect on our cost structure or our operating results. Notwithstanding our dedication to being a responsible corporate citizen, it is reasonably possible that such legislation or regulation could impose material costs on us.

Anti-terrorism measures and other disruptions to the raw material supply network could impact our operations.

Our ability to provide efficient distribution of products to our customers is an integral component of our overall business strategy. In the aftermath of terrorist attacks in the United States, federal, state and local

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authorities have implemented and continue to implement various security measures that affect the raw material supply network in the United States and abroad. If security measures disrupt or impede the receipt of sufficient raw materials, we may fail to meet the needs of our customers or may incur increased expenses to do so.

Risks Relating to Our Indebtedness

We have substantial debt and may incur substantial additional debt, which could adversely affect our financial health, reduce our profitability, limit our ability to obtain financing in the future and pursue certain business opportunities and reduce the value of your investment.

As of March 31, 2014, we had an aggregate principal amount of $454.0 million of outstanding debt. In the fiscal year ended March 31, 2014, we incurred $16.1 million of interest expense.

The amount of our debt or such other obligations could have important consequences for holders of our common stock, including, but not limited to:

•

a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes;

•

our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes and other purposes may be impaired in the future;

•

we are exposed to the risk of increased interest rates because a portion of our borrowings is at variable rates of interest;

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we may be at a competitive disadvantage compared to our competitors with less debt or with comparable debt at more favorable interest rates and that, as a result, may be better positioned to withstand economic downturns;

•

our ability to refinance indebtedness may be limited or the associated costs may increase;

•

our ability to engage in acquisitions without raising additional equity or obtaining additional debt financing may be impaired in the future;

•

it may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on and acceleration of such indebtedness;

•

we may be more vulnerable to general adverse economic and industry conditions; and

•

our flexibility to adjust to changing market conditions and our ability to withstand competitive pressures could be limited, or we may be prevented from making capital investments that are necessary or important to our operations in general, growth strategy and efforts to improve operating margins of our business units.

If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or refinance our debt. We cannot make assurances that we will be able to refinance our debt on terms acceptable to us, or at all. In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

We cannot make assurances that we will be able to refinance any of our indebtedness, or obtain additional financing, particularly because of our high levels of debt and the debt incurrence restrictions imposed by the agreements governing our debt, as well as prevailing market conditions. We could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Subject to certain exceptions, our Senior Loan Facilities and our Senior Notes, which we have defined in “Description of Certain Indebtedness,” restrict our ability to dispose of assets and how we use the

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proceeds from any such dispositions. We cannot make assurances that we will be able to consummate those dispositions, or if we do, what the timing of the dispositions will be or whether the proceeds that we realize will be adequate to meet our debt service obligations, when due.

Despite our current level of indebtedness, we may still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above.

We may be able to incur significant additional indebtedness in the future. Although the agreements governing our indebtedness contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness, including obligations under lease arrangements that are currently recorded as operating leases even if operating leases were to be treated as debt under GAAP. In addition, our Revolving Credit Facility provides an aggregate commitment of up to $325.0 million. As of March 31, 2014, we had an additional $68.4 million of availability under the Revolving Credit Facility plus $12.0 million in indebtedness outstanding under a separate revolving credit facility with our subsidiary, ADS Mexicana, S.A. de C.V. If new debt is added to our current debt levels, the related risks that we now face could intensify. See “Description of Certain Indebtedness.”

The agreements and instruments governing our debt contain restrictions and limitations that could significantly impact our ability to operate our business and adversely affect the holders of our common stock.

The covenants contained in our Senior Loan Facilities and our Senior Notes, which we refer to collectively as our Credit Facilities, are consistent. These covenants, among other things, restrict or limit our ability to:

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dispose of assets;

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incur additional indebtedness (including guarantees of additional indebtedness);

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prepay or amend our various debt instruments;

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pay dividends and make certain payments;

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redeem stock or make other distributions;

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create liens on assets;

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make certain investments;

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engage in certain asset sales, mergers, acquisitions, consolidations or sales of all, or substantially all, of our assets; and

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engage in certain transactions with affiliates.

Our ability to comply with the covenants and restrictions contained in the Credit Facilities may be affected by economic, financial and industry conditions beyond our control. The breach of any of these covenants or restrictions could result in a default under the Credit Facilities that would permit the applicable lenders or noteholders, as the case may be, to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. If we are unable to repay indebtedness, secured parties having secured obligations, such as the lenders under the Credit Facilities, could proceed against the collateral securing the secured obligations. This could have serious consequences to our financial condition and results of operations and could cause us to become bankrupt or insolvent.

We may have future capital needs and may not be able to obtain additional financing on acceptable terms.

Although we believe that our current cash position and the additional committed funding available under our Credit Facilities is sufficient for our current operations, any reductions in our available borrowing capacity, or

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our inability to renew or replace our debt facilities, when required or when business conditions warrant, could have a material adverse effect on our business, financial condition and results of operations. The economic conditions, credit market conditions, and economic climate affecting our industry, as well as other factors, may constrain our financing abilities. Our ability to secure additional financing, if available, and to satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance, the availability of credit generally, economic conditions and financial, business and other factors, many of which are beyond our control. The market conditions and the macroeconomic conditions that affect our industry could have a material adverse effect on our ability to secure financing on favorable terms, if at all.

If financing is not available when needed, or is available on unfavorable terms, we may be unable to take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations. If we raise additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership, and any new securities we issue could have rights, preferences and privileges senior to those of holders of our common stock.

Increases in interest rates would increase the cost of servicing our debt and could reduce our profitability.

A significant portion of our outstanding debt, including the debt under our Senior Loan Facilities, bears interest at variable rates. As a result, increases in interest rates would increase the cost of servicing our debt and could materially reduce our profitability and cash flows. Each 1.0% increase in interest rates on our variable-rate debt would increase our annual forecasted interest expense by approximately $2.3 million based on balances as of March 31, 2014. Assuming all revolving loans were fully drawn, each 1.0% increase in interest rates would result in a $2.8 million increase in annual cash interest expense on our Credit Facilities.

With respect to the indebtedness outstanding under our Credit Facilities that bear interest at variable rates, such variable rates are determined based upon specified pricing terms. As a result, if our leverage ratios increase, then such variable rates could also increase. See “Description of Certain Indebtedness.”

We may not be able to satisfy our outstanding obligations upon a change of control.

Under the Senior Loan Facility, a change of control (as defined therein) constitutes an event of default that permits the lenders to accelerate the maturity of borrowings under the agreement and terminate their commitments to lend. Additionally, under the Senior Notes, a change of control (as defined therein) constitutes an event of default that permits the noteholders to declare all of their notes to be immediately due and payable. In order to avoid events of default under each of our Credit Facilities, we may therefore have to avoid certain change of control transactions that would otherwise be beneficial to us.

Risks Relating to Our Common Stock and This Offering

Our ability to make future dividend payments, if any, may be restricted.

We have a history of paying dividends to our stockholders when sufficient cash is available, and we currently intend to pay dividends in the future after this offering. Any determination to pay dividends on our capital stock in the future will be at the discretion of our board of directors, subject to applicable laws and the provisions of our amended and restated certificate of incorporation (including those relating to the payment of dividends on our convertible preferred stock), and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. For more information on our convertible preferred stock, see “Description of Capital Stock — Preferred Stock.” In addition, the terms of our Credit Facilities contain restrictions on our ability to pay dividends. Also, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock. See “Dividend Policy.”

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Our common stock has no prior public market and the market price of our common stock may be volatile and could decline after this offering.

Prior to this offering, there has not been a public market for our common stock, and an active market for our common stock may not develop or be sustained after this offering. We will negotiate the initial public offering price per share with the representatives of the underwriters and therefore, that price may not be indicative of the market price of our common stock after this offering. We cannot assure you that an active public market for our common stock will develop after this offering or, if it does develop, will be sustained. In the absence of a public trading market, you may not be able to liquidate your investment in our common stock. In addition, the market price of our common stock may fluctuate significantly. Among the factors that could affect our stock price are:

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industry or general market conditions;

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domestic and international economic factors unrelated to our performance;

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changes in our customers’ preferences;

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new regulatory pronouncements and changes in regulatory guidelines;

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actual or anticipated fluctuations in our quarterly operating results;

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changes in securities analysts’ estimates of our financial performance or lack of research and reports by industry analysts;

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action by institutional stockholders or other large stockholders (including ASP ADS Investco, LLC), including future sales;

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speculation in the press or investment community;

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investor perception of us and our industry;

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changes in market valuations or earnings of similar companies;

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announcements by us or our competitors of significant products, contracts, acquisitions or strategic partnerships;

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developments or disputes concerning patents or proprietary rights, including increases or decreases in litigation expenses associated with intellectual property lawsuits we may initiate, or in which we may be named as defendants;

•

failure to complete significant sales;

•

any future sales of our common stock or other securities; and

•

additions or departures of key personnel.

In particular, we cannot assure you that you will be able to resell your shares at or above the initial public offering price. The stock markets have experienced extreme volatility in recent years that has been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against such company. Any litigation of this type brought against us could result in substantial costs and a diversion of our management’s attention and resources, which would harm our business, operating results and financial condition.

Future sales of shares by existing stockholders, including our ESOP, could cause our stock price to decline.

Sales of substantial amounts of our common stock in the public market following this offering, or the perception that these sales could occur, could cause the market price of our common stock to decline. Based on shares outstanding as of March 31, 2014, upon completion of this offering, we will have outstanding shares of common stock. All of the shares sold pursuant to this offering will be immediately tradeable without restriction

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under the Securities Act of 1933, as amended, unless held by “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock outstanding upon completion of this offering will be restricted securities within the meaning of Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if their offer and sale is registered under the Securities Act or if the offer and sale of those securities qualify for an exemption from registration, including exemptions provided by Rules 144 and 701 under the Securities Act, subject to the terms of the lock-up agreements entered into among us, Barclays Capital Inc. and Deutsche Bank Securities Inc., as the representatives of the underwriters, and stockholders holding more than % of our common stock prior to this offering. Upon completion of this offering, we intend to file one or more registration statements under the Securities Act to register the shares of common stock to be issued under our equity compensation plans and, as a result, all shares of common stock acquired upon exercise of stock options granted under our plans will also be freely tradable under the Securities Act, subject to the terms of the lock-up agreements, unless purchased by our affiliates. As of March 31, 2014, there were stock options outstanding to purchase a total of approximately shares of our common stock. In addition, shares of common stock are reserved for future issuance under our 2013 Stock Option Plan.

We, stockholders holding more than % of our common stock prior to this offering and our executive officers and directors have agreed to a “lock-up,” meaning that, subject to certain exceptions, neither we nor they will sell any shares of our common stock without the prior consent of Barclays Capital Inc. and Deutsche Bank Securities Inc., as the representatives of the underwriters, for 180 days after the date of this prospectus. Following the expiration of this 180-day lock-up period, approximately million shares of our common stock will be eligible for future sale, subject to the applicable volume, manner of sale, holding period and other limitations of Rule 144. See “Shares of Common Stock Eligible for Future Sale” for a discussion of the shares of common stock that may be sold into the public market in the future. In addition, certain of our significant stockholders may distribute shares that they hold to their investors who themselves may then sell into the public market following the expiration of the lock-up period. Such sales may not be subject to the volume, manner of sale, holding period and other limitations of Rule 144. As resale restrictions end, the market price of our common stock could decline if the holders of those shares sell them or are perceived by the market as intending to sell them. Barclays Capital Inc. and Deutsche Bank Securities Inc., as the representatives of the underwriters, may, in their sole discretion and at any time, release all or any portion of the securities subject to lock-up agreements entered into in connection with this offering. See “Underwriting.”

All of the shares of our convertible preferred stock held by our ESOP may be converted into our common stock at any time by action of the ESOP trustee, and will be automatically converted into our common stock upon distributions of such shares allocated to the ESOP accounts of ESOP participants upon a distribution event such as retirement and other termination of employment. Such distributed common stock will not be subject to any lock-up agreement and will be eligible for future sale, subject to the applicable volume, manner of sale, holding period and other limitations of Rule 144. As of March 31, 2014, there were approximately 5.6 million shares of convertible preferred stock held by our ESOP, which in aggregate could be converted into approximately 4.3 million shares of our common stock. All of these shares will be eligible for future sale, either by the ESOP trustee or by ESOP participants, subject to the limitations of Rule 144. After the completion of this offering, the convertible preferred stock held by our ESOP will account for approximately % of our common stock on a fully-converted basis. See “Description of Employee Stock Ownership Plan” for shares relating to distributions and diversifications during fiscal years 2012, 2013 and 2014.

In the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement or employee arrangement or otherwise. Any of these issuances could result in substantial dilution to our existing stockholders and could cause the trading price of our common stock to decline.

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If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If there is no coverage of us by securities or industry analysts, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of these analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price or trading volume to decline.

Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.

Prior to completion of this offering, our directors, officers and principal stockholders and their affiliates collectively own approximately 91% of our outstanding shares of common stock. Additionally, our ESOP holds convertible preferred stock that converts into a substantial number of shares of our common stock and, prior to conversion, is entitled to vote on a one-for-one basis on any matter requiring the vote or consent of our stockholders, voting together with our common stock as a single class unless otherwise required by law. Thus, the collective voting power of our directors, officers and principal stockholders and their affiliates prior to completion of this offering is approximately 94%, inclusive of the outstanding shares of convertible preferred stock held by the ESOP. After this offering, assuming no exercise of the underwriters’ option to purchase additional shares, our directors, officers and principal stockholders and their affiliates collectively will hold approximately % of our voting power, inclusive of the outstanding shares of convertible preferred stock held by the ESOP. As a result, these stockholders, if they act together, may be able to control our management and affairs and most matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change of control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of our other stockholders.

The trustee of our ESOP has certain limited powers to vote a large block of shares on matters presented to stockholders for approval.

In general, the trustee of the ESOP votes the shares of stock held by the ESOP as directed by the ESOP’s committee. Consequently, the trustee of the ESOP, per the ESOP committee’s discretion, has the ability to vote a significant block of shares on certain matters presented to shareholders for approval. However, in the event of either a corporate matter with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all of the assets of a trade or business or with respect to any tender or exchange offer, or a request or invitation for tenders or exchanges, each participant in the ESOP may direct the trustee of the ESOP on how to vote the shares of stock allocated to the participant’s ESOP accounts; and the trustee must vote any unallocated stock and allocated stock for which no participant instructions were received in the same proportion as the allocated stock for which participants’ voting instructions have been received is voted.

Fulfilling our obligations incident to being a public company, including with respect to the requirements of and related rules under the Sarbanes-Oxley Act of 2002, will be expensive and time-consuming, and any delays or difficulties in satisfying these obligations could have a material adverse effect on our future results of operations and our stock price.

Following this offering, we will be subject to the reporting and corporate governance requirements, the listing standards of the New York Stock Exchange, or the NYSE, and the Sarbanes-Oxley Act of 2002, that apply to issuers of listed equity, which will impose certain new compliance costs and obligations upon us. The changes

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necessitated by publicly listing our equity will require a significant commitment of additional resources and management oversight which will increase our operating costs. These changes will also place additional demands on our finance and accounting staff and on our financial accounting and information systems. Other expenses associated with being a public company include increases in auditing, accounting and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses. As a public company, we will be required, among other things, to:

•

define and expand the roles and the duties of our board of directors and its committees; and

•

institute more comprehensive compliance, investor relations and internal audit functions.

In particular, beginning with the year ending March 31, 2016, our independent registered public accounting firm will be required to provide an attestation report on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. If our independent registered public accounting firm is unable to provide us with an unqualified report regarding the effectiveness of our internal control over financial reporting (at such time as it is required to do so), investors could lose confidence in the reliability of our financial statements. This could result in a decrease in the value of our common stock. Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially subject us to sanctions or investigations by the SEC, NYSE, or other regulatory authorities.

Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of us and may affect the trading price of our common stock.

Our amended and restated certificate of incorporation and amended and restated bylaws will include a number of provisions that may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. For example, our amended and restated certificate of incorporation and amended and restated bylaws will:

•

authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt;

•

maintain a classified board of directors, as a result of which our board will continue to be divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting;

•

limit the ability of stockholders to remove directors;

•

provide that vacancies on our board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office;

•

prohibit stockholders from calling special meetings of stockholders;

•

prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders;

•

not give the holders of our common stock cumulative voting rights with respect to the election of directors, which means that the holders of a majority of our outstanding shares of common stock can elect all directors standing for election;

•

establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;

•

require a super-majority stockholders vote of 75% to approve any reorganization, recapitalization, share exchange, share reclassification, consolidation, merger, conversion or sale of all or substantially all assets to which we are a party that is not approved by the affirmative vote of at least 75% of the members of our board of directors; and

•

require the approval of holders of at least 75% of the outstanding shares of our voting common stock to amend the bylaws and certain provisions of the certificate of incorporation.

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Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or DGCL that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock. See “Description of Capital Stock — Anti-Takeover Effects of our Certificate of Incorporation and Bylaws.”

Our amended and restated certificate of incorporation and amended and restated bylaws may also make it difficult for stockholders to replace or remove our management. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders.

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by our directors, officers, employees or agents; any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our common stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us or our directors, officers, employees or agents. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Investors purchasing common stock in this offering will experience immediate and substantial dilution as a result of this offering and future equity issuances.

If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in the book value of your stock, because the price that you pay will be substantially greater than the net tangible book value per share of the shares you acquire. As a result, you will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. The net tangible book value per share, calculated as of March 31, 2014 and after giving effect to the offering (assuming an initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus), is $ . Investors purchasing common stock in this offering will experience immediate and substantial dilution of $ a share, based on an initial public offering price of $ , which is the midpoint of the price range set forth on the cover page of this prospectus. In addition, we have issued options to acquire common stock at prices significantly below the initial public offering price. To the extent outstanding options are ultimately exercised, there will be further dilution to investors in this offering. In addition, if we issue additional equity securities in the future, investors purchasing common stock in this offering will experience additional dilution. See “Dilution.”

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

This prospectus includes forward-looking statements. Some of the forward-looking statements can be identified by the use of terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. These forward-looking statements include all matters that are not related to present facts or current conditions or that are not historical facts. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our consolidated results of operations, financial condition, liquidity, prospects and growth strategies and the industries in which we operate and including, without limitation, statements relating to our future performance.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond our control. We caution you that forward-looking statements are not guarantees of future performance and that our actual consolidated results of operations, financial condition and liquidity, and industry development may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our consolidated results of operations, financial condition and liquidity, and industry development are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors could cause actual results to differ materially from those contained in or implied by the forward-looking statements, including the risks and uncertainties discussed in this prospectus under the headings “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.” Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include:

•

fluctuations in the price and availability of resins and other raw materials and our ability to pass any increased costs of raw materials on to our customers in a timely manner;

•

volatility in general business and economic conditions in the markets in which we operate, including without limitation, factors relating to availability of credit, interest rates, fluctuations in capital and business and consumer confidence;

•

cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending;

•

the risks of increasing competition in our existing and future markets, including competition from both manufacturers of high performance thermoplastic corrugated pipe and manufacturers of products using alternative materials;

•

our ability to continue to convert current demand for concrete, steel and PVC pipe products into demand for our high performance thermoplastic corrugated pipe and Allied Products;

•

the effect of weather or seasonality;

•

the loss of any of our significant customers;

•

the risks of doing business internationally;

•

the risks of conducting a portion of our operations through joint ventures;

•

our ability to expand into new geographic or product markets;

•

our ability to achieve the acquisition component of our growth strategy;

•

the risk associated with manufacturing processes;

•

our ability to manage our assets;

•

the risks associated with our product warranties;

•

our ability to manage our supply purchasing and customer credit policies;

- 41 -

•

the risks associated with our self-insured programs;

•

our ability to control labor costs and to attract, train and retain highly-qualified employees and key personnel;

•

our ability to protect our intellectual property rights;

•

changes in laws and regulations, including environmental laws and regulations;

•

our ability to project product mix;

•

the risks associated with our current levels of indebtedness;

•

our ability to meet future capital requirements and fund our liquidity needs; and

•

other risks and uncertainties, including those listed under “Risk Factors.”

All forward-looking statements are made only as of the date of this prospectus and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.

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USE OF PROCEEDS

Based upon an assumed initial public offering price of $ per share, which is the mid-point of the price range set forth on the cover page of this prospectus, we estimate that we will receive net proceeds from this offering of approximately $ million, after deducting estimated underwriting discounts and commissions in connection with this offering and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares by the selling stockholders.

We intend to use the net proceeds from this offering to repay at least $ million of outstanding indebtedness under the revolving portion of our credit facility. We intend to use the remaining proceeds (if any) for general corporate purposes, including working capital. The revolving portion of our credit facility consists of a $325.0 million secured revolving credit facility, with an interest rate based on a fluctuating rate of interest, currently at approximately 2.3%, which matures on June 12, 2018. Our revolving credit facility and other indebtedness is described below under “Description of Certain Indebtedness — Senior Loan Facilities.” In the last 12 months, we borrowed under our revolving credit facility to pay a $108.1 million special dividend and to fund working capital.

A $1.00 increase or decrease in the assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) would increase or decrease the net proceeds to us from this offering by $ million assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commission and estimated offering expenses payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease the net proceeds to us by $ million, assuming no change in the assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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DIVIDEND POLICY

We have a history of paying dividends to our stockholders when sufficient cash is available, and we currently intend to pay regular quarterly dividends in the future after this offering. Our quarterly dividend will initially be set at $ per share of our common stock (including, on an as-converted basis, our shares of convertible preferred stock). During fiscal years 2012, 2013 and 2014, we declared dividends on our common stock of approximately $4.3 million, $4.8 million and $80.1 million, respectively. All such declared dividends were paid in quarterly installments, except with respect to fiscal year 2014, in which we also had a one-time special dividend of approximately $108.1 million, in the aggregate, on our common stock and our convertible preferred stock that was paid on January 15, 2014.

Any determination to pay dividends on our capital stock in the future will be at the discretion of our board of directors, subject to applicable laws and the provisions of our amended and restated certificate of incorporation (including those relating to the payment of dividends on our convertible preferred stock), and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. In addition, the terms of our credit facilities contain restrictions on our ability to pay dividends.

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CAPITALIZATION

The following table sets forth our cash and capitalization on a consolidated basis as of March 31, 2014:

•

on an actual basis; and

•

on an as adjusted basis to give effect to (i) the sale by us of shares of our common stock in this offering at an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) and (ii) the use of the net proceeds from this offering as described in “Use of Proceeds.”

You should read this table in conjunction with the sections of this prospectus entitled “Use of Proceeds,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness” and our consolidated financial statements and related notes included elsewhere in this prospectus.


	As of March 31, 2014
	Actual			As Adjusted ⁽¹⁾
(Amounts in thousands, except per share amounts)
Cash	$	3,931		$

Long Term Debt (including current portion)
Revolving Credit Facility		248,100
Term Loan		97,500
Senior Notes		100,000
Other debt		8,448

Total Long Term Debt (including current portion)		454,048
Mezzanine equity
Redeemable Common Stock; $0.01 par value: (i) actual: 8,141 shares issued and outstanding and (ii) as adjusted: no shares issued and outstanding ⁽²⁾		549,119
Redeemable Convertible Preferred Stock; $0.01 par value: 10,000 authorized: (i) actual: 5,551 issued and outstanding and (ii) as adjusted: issued and outstanding ⁽³⁾		291,720
Deferred compensation — unearned ESOP shares ⁽³⁾		(197,888	)

Total mezzanine equity		642,951
Stockholders’ equity:
Convertible preferred stock, $0.01 par value per share, (i) actual: no shares authorized, issued and outstanding and (ii) as adjusted: shares authorized and shares issued and outstanding		—
Common stock, $0.01 par value per share: (i) actual: 23,359 shares authorized and issued and 1,942 shares outstanding and (ii) as adjusted: shares authorized and issued and shares outstanding		11,957
Paid-in capital		22,547
Common stock in treasury, at cost		(448,439	)
Accumulated other comprehensive loss		(5,977	)
Retained earnings		—

Total ADS stockholders’ equity		(419,912	)
Noncontrolling interest in subsidiaries		22,576

Total stockholders’ equity		(397,336	)

Total capitalization	$	699,663		$

(1)	Each $1.00 increase or decrease in the assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) would increase or decrease, as applicable, our as adjusted cash, paid-in capital and stockholders’

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equity by $ million, assuming that the number of shares offered by us as set forth on the cover page of this prospectus remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses. Each 1,000,000 increase or decrease in the number of shares offered by us would increase or decrease, as applicable, our as adjusted cash, paid-in capital and stockholders’ equity by $ million assuming no change in the assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses.

The share information as of March 31, 2014 shown in the table above excludes (on a post-stock split basis):

•

million shares of restricted stock outstanding as of , 2014 under our 2008 Restricted Stock Plan;

•

million shares of common stock issuable upon exercise of options outstanding as of March 31, 2014 at a weighted average exercise price of $ per share; and

•

million shares of common stock reserved for future issuance under our 2013 Stock Option Plan.

(2)	Upon completion of this offering, the redemption rights associated with these shares, which require them to be classified in mezzanine equity, will be no longer be in effect. As a result, we anticipate reclassifying these balances to total stockholders’ equity upon the completion of this offering.

(3)	Upon completion of this offering, the redemption rights associated with these shares, which require them to be classified in mezzanine equity, will be no longer be in effect. As a result, we anticipate reclassifying these balances to total stockholders’ equity upon the completion of this offering.

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DILUTION

If you invest in our common stock, the book value of your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock immediately after this offering.

Our net tangible book value as of March 31, 2014 was approximately $93.1 million, and net tangible book value per share was $ . Net tangible book value per share before the offering has been determined by dividing net tangible book value (total book value of tangible assets less total liabilities) by the number of shares of common stock outstanding at March 31, 2014, after giving effect to a -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.

After giving effect to the sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value at March 31, 2014 would have been $ million, or $ per share. This represents an immediate decrease in net tangible book value per share of $ to the existing stockholders and dilution in net tangible book value per share of $ to new investors who purchase shares in this offering. The following table illustrates this per share dilution to new investors:


Assumed initial public offering price per share		$
Net tangible book value per share as of March 31, 2014	$
Increase per share attributable to this offering

Net tangible book value, as adjusted to give effect to this offering

Dilution in net tangible book value to new investors in this offering		$

A $1.00 increase or decrease in the assumed initial offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) would increase or decrease our net tangible book value as adjusted to give effect to this offering by $ per share, assuming that the number of shares offered by us set forth on the cover page of this prospectus remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease our net tangible book value as adjusted to give effect to this offering by $ per share, assuming the assumed initial offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, as of March 31, 2014, the total number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by the existing stockholders and by new investors purchasing shares in this offering:

Shares Purchased

Total Consideration

Average
Price Per
Share

Number

Percent

Amount

Percent

Existing Stockholders

New investors

Total

The share information as of March 31, 2014 shown in the table above excludes:

•

approximately million shares of common stock issuable upon exercise of options outstanding as of March 31, 2014 at a weighted average exercise price of $ per share; and

•

million shares of common stock reserved for future issuance under our 2013 Stock Option Plan, 2008 Restricted Stock Plan and Amended 2000 Incentive Stock Option Plan.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The selected historical consolidated financial data presented below as of March 31, 2013 and 2014 and for fiscal years 2012, 2013 and 2014 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial data presented below as of March 31, 2010, 2011 and 2012 and for fiscal years 2010 and 2011 have been derived from our audited consolidated financial statements which are not included in this prospectus.

The results indicated below and elsewhere in this prospectus are not necessarily indicative of our future performance. You should read this data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This selected historical consolidated financial data does not reflect the earnings per share and dividends per share impact of our -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part.


	Fiscal Year Ended March 31,
(Amounts in thousands, except per share data)	2010 ⁽¹⁾			2011			2012			2013			2014
Consolidated statement of income data:
Net sales	$	751,237		$	863,138		$	1,013,756		$	1,017,041		$	1,069,009
Cost of goods sold		553,863			692,164			818,398			807,730			856,118

Gross profit		197,374			170,974			195,358			209,311			212,891
Selling expenses		58,801			63,103			67,625			69,451			75,024
General and administrative expenses		61,872			61,648			65,927			67,712			78,478
Gain on sale of assets/ business		—			—			(44,634	)		(2,210	)		(5,338	)
Intangibles amortization		4,636			7,294			11,387			11,295			11,412

Income from operations		72,065			38,929			95,053			63,063			53,315
Interest expense		10,725			27,121			21,837			16,095			16,141
Other miscellaneous (income) expense, net ⁽²⁾		(26,875	)		(847	)		2,425			283			133

Income before income taxes		88,215			12,655			70,791			46,685			37,041
Income tax expense		33,067			4,053			27,064			16,894			22,575
Equity in net (income) loss of unconsolidated affiliates		(2,404	)		(736	)		(704	)		(387	)		1,592

Net income		57,552			9,338			44,431			30,178			12,874
Less net income attributable to the noncontrolling interest		3,677			3,342			1,171			2,019			1,750

Net income attributable to ADS		53,875			5,996			43,260			28,159			11,124

Change in fair value of Redeemable Convertible Preferred Stock		(11,890	)		(3,541	)		(10,257	)		(5,869	)		(3,979	)
Dividends paid to Redeemable Convertible Preferred Stockholders		(1,029	)		(844	)		(668	)		(736	)		(10,139	)
Dividends paid to unvested restricted stockholders		(6	)		(104	)		(34	)		(52	)		(418	)

Net income (loss) available to common stockholders and participating securities		40,950			1,507			32,301			21,502			(3,412	)
Undistributed income (loss) allocated to participating securities		(6,058	)		—			(3,241	)		(2,042	)		—

Net income (loss) available to common stockholders	$	34,892		$	1,507		$	29,060		$	19,460		$	(3,412	)

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	Fiscal Year Ended March 31,
(Amounts in thousands, except per share data)	2010 ⁽¹⁾		2011		2012		2013		2014
Weighted average common shares outstanding:
Basic		10,437		10,127		9,835		9,921		10,044
Diluted		10,742		10,346		9,996		10,038		10,044
As adjusted — Basic ⁽³⁾		10,437		10,127		9,835		9,921		10,044
As adjusted — Diluted ⁽³⁾		10,742		11,953		9,996		10,038		10,138
Net income (loss) per share:
Basic	$	3.34	$	0.15	$	2.95	$	1.96	$	(0.34	)
Diluted	$	3.25	$	0.15	$	2.91	$	1.94	$	(0.34	)
As adjusted — Basic ⁽³⁾	$	4.29	$	0.49	$	3.88	$	2.48	$	0.06
As adjusted — Diluted ⁽³⁾	$	4.17	$	0.47	$	3.81	$	2.45	$	0.06
Cash dividends declared per share	$	0.40	$	0.44	$	0.44	$	0.48	$	7.91


	Fiscal Year Ended March 31,
(Amounts in thousands, except percentages)	2010 ⁽¹⁾			2011			2012			2013			2014
Other financial data:
Capital expenditures	$	23,140		$	30,041		$	26,467		$	40,004		$	40,288
Adjusted EBITDA ⁽⁴⁾		127,228			100,780			116,873			129,759			147,009
Adjusted EBITDA margin ⁽⁵⁾		16.9	%		11.7	%		11.5	%		12.8	%		13.8	%


	As of March 31,
(Amounts in thousands)	2010 ⁽¹⁾		2011 ⁽¹⁾			2012			2013			2014
Consolidated balance sheet data:
Cash	$	3,021	$	2,151		$	2,082		$	1,361		$	3,931
Working capital ⁽⁶⁾		166,125		204,061			208,268			220,276			263,907
Total assets		794,049		866,798			905,028			907,739			937,595
Long-term debt		251,446		374,746			370,672			349,990			454,048
Total liabilities		457,138		618,351			615,314			585,115			691,980
Total mezzanine equity ⁽⁷⁾		104,859		493,674			557,563			608,346			642,951
Total stockholders’ equity		232,052		(245,227	)		(267,849	)		(285,722	)		(397,336	)
Total mezzanine equity and stockholders’ equity		336,911		248,447			289,714			322,624			245,615


	Fiscal Year Ended March 31,
(Amounts in thousands)	2010 ⁽¹⁾			2011			2012			2013			2014
Statement of cash flows data:
Net cash provided by operating activities	$	70,343		$	37,233		$	56,997		$	68,215		$	62,122
Net cash (used in) investing activities		(47,011	)		(53,237	)		(35,833	)		(47,199	)		(41,767	)
Net cash provided by (used in) financing activities		(30,448	)		15,134			(21,233	)		(21,737	)		(17,712	)

(1)

The presentation of our selected historical consolidated financial data as of March 31, 2010 and 2011 and for fiscal year 2010 has been adjusted to comply with the retrospective application of our inventory accounting principle change. In April 2011, the Company changed the method of valuing raw materials from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. The Company believes the FIFO method of inventory valuation is preferable for the raw materials valuation because FIFO provides a better matching of inventory costs of its products with the sales due to a lag in the pass-through of changes in resin costs to customers and enhances the comparability of results to our peers. As a result of this change, all prior period amounts have been retrospectively adjusted as of the beginning of the earliest period presented.

(2)	Other miscellaneous (income) expense, net for fiscal year ended March 31, 2010 includes a gain of $25,952 from the purchase of the controlling interest of an unconsolidated affiliate.

(3)

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	Fiscal Year Ended March 31,
(Amounts in thousands, except per share data)	2010			2011			2012			2013			2014
Net Income Per Share As Adjusted — Basic
Net income available to common stockholders	$	34,892		$	1,507		$	29,060		$	19,460		$	(3,412	)
Adjustment for:
Change in fair value of Redeemable Convertible Preferred Stock		11,890			3,541			10,257			5,869			3,979
Undistributed income allocated to participating securities		(1,959	)		(76	)		(1,189	)		(716	)		—

Net income available to common stockholders used to calculate Net Income Per Share As Adjusted — Basic	$	44,823		$	4,972		$	38,128		$	24,613		$	567

Weighted average common shares outstanding:
Basic		10,437			10,127			9,835			9,921			10,044
As adjusted — Basic		10,437			10,127			9,835			9,921			10,044
Net Income Per Share As Adjusted — Diluted
Net income available to common stockholders used to calculate Net Income Per Share As Adjusted — Basic	$	44,823		$	4,972		$	38,128		$	24,613		$	567
Adjustment for:
Undistributed income allocated to participating Redeemable Convertible Preferred Stock		—			74			—			—			—
Dividends paid to Redeemable Convertible Preferred Stockholders, net of tax impact		—			557			—			—			—
Other adjustments		—			(4	)		—			—			—

Net income available to common stockholders used to calculate Net Income Per Share As Adjusted — Diluted	$	44,823		$	5,599		$	38,128		$	24,613		$	567

Weighted average common shares outstanding
Diluted		10,742			10,346			9,996			10,038			10,044
Conversion of the outstanding Redeemable Convertible Preferred Stock on an as converted basis		—			1,607			—			—			—
Assumed exercise of stock options		—			—			—			—			94

As adjusted — Diluted		10,742			11,953			9,996			10,038			10,138
Net income (loss) per share:
As adjusted — Basic	$	4.29		$	0.49		$	3.88		$	2.48		$	0.06
As adjusted — Diluted	$	4.17		$	0.47		$	3.81		$	2.45		$	0.06

(4)

EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, have been presented in this prospectus as supplemental measures of financial performance that are not required by, or presented in accordance with generally accepted accounting principles or GAAP. We calculate EBITDA as net income attributable to ADS before interest, income taxes, depreciation and amortization. We calculate Adjusted EBITDA as EBITDA before stock-based compensation expense, non-cash charges and certain other expenses.

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The following table presents a reconciliation of EBITDA and Adjusted EBITDA to Net income, the most comparable GAAP measure, for each of the periods indicated.


	Fiscal Year Ended March 31,
(Amounts in thousands)	2010			2011			2012			2013			2014
Net income attributable to ADS	$	53,875		$	5,996		$	43,260		$	28,159		$	11,124
Depreciation and amortization ^(a)		50,033			56,327			59,356			56,926			57,454
Interest expense		10,725			27,121			21,837			16,095			16,141
Income tax expense		33,067			4,053			27,064			16,894			22,575

EBITDA		147,700			93,497			151,517			118,074			107,294
Derivative fair value adjustments ^(b)		(1,665	)		(1,365	)		2,315			(4	)		(53	)
Foreign currency transaction losses ^(c)		—			332			378			1,085			845
Gain on sale of Septic Chamber business ^(d)		—			—			(44,634	)		—			—
Unconsolidated affiliates interest and tax ^(e)		166			624			915			729			204
Gain from purchase of the controlling interest of an unconsolidated affiliate ^(f)		(25,952	)		—			—			—			—
Management fee to minority interest holder JV ^(g)		—			—			—			—			1,098
Special dividend compensation		—			—			—			—			22,624
Contingent consideration remeasurement		—			—			—			—			259
Stock based compensation ^(h)		1,823			2,725			1,425			2,592			5,287
ESOP deferred stock based compensation ⁽ⁱ⁾		5,156			4,564			4,957			7,283			7,891
Transaction costs ^(j)		—			403			—			—			1,560

Adjusted EBITDA	$	127,228		$	100,780		$	116,873		$	129,759		$	147,009

(a)

Includes our proportionate share of depreciation and amortization expense of $233, $552, $985, $1,321 and $1,556 related to our South American Joint Venture and our BaySaver Joint Venture, which amounts are included in equity in net income of unconsolidated affiliates in our consolidated statements of income for fiscal years 2010, 2011, 2012, 2013 and 2014, respectively. Depreciation and amortization expense for fiscal year 2012 also includes a charge of $3,200 related to the impairment of one of our trademarks.

(b)

(c)

Represents the gains and losses incurred on purchases, sales and intercompany loans and dividends denominated in non-functional currencies.

(d)

Represents a gain recognized on the sale of our septic chamber business in January 2012.

(e)

(f)

Represents a gain from fair value re-measurement of investment in an unconsolidated affiliate upon acquiring the controlling interest of the affiliate.

(g)

Represents management fee paid to a minority interest holder of a consolidated subsidiary.

(h)

Represents the non-cash stock based compensation cost related to our stock options and restricted stock awards.

(i)

Represents the non-cash stock based compensation expense attributable to the shares of convertible preferred stock allocated to employee ESOP accounts during the applicable period.

(j)

Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with our recent debt refinancing and in connection with this offering.

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(5)	Adjusted EBITDA margin for any period represents Adjusted EBITDA as a percentage of net sales for that period.

(6)	Working capital is the difference between our current assets and current liabilities. Working capital is an indication of liquidity and potential need for short-term funding.

(7)

Our mezzanine equity consists of the Redeemable Convertible Preferred Stock held by our ESOP and Redeemable Common Stock held by certain stockholders who have certain rights associated with such shares, which rights are considered for purposes of GAAP to be a redemption right, which is beyond our control. See Note 16 Mezzanine Equity, within our consolidated financial statements included elsewhere in this prospectus for further information regarding the accounting treatment for our mezzanine equity. Upon completion of this offering, the redemption rights associated with these shares, which require them to be classified in mezzanine equity, will be no longer be in effect. As a result, we anticipate reclassifying these balances to total stockholders’ equity upon the completion of this offering.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related footnotes included elsewhere in this prospectus. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements and Information” included elsewhere in this prospectus. You should read the following discussion together with the sections titled “Risk Factors,” “Selected Historical Consolidated Financial Data” and our consolidated financial statements, including the related footnotes, included elsewhere in this prospectus.

We consolidate all of our joint ventures for purposes of GAAP, except for our South American Joint Venture and our BaySaver Joint Venture.

Overview

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Key Factors Affecting Our Results of Operations

Product Demand

There are numerous factors that influence demand for our products. Our businesses are cyclical in nature and sensitive to general economic conditions, primarily in the United States, Canada, Mexico and South America. The non-residential, residential, agricultural and infrastructure markets we serve are affected by the availability of credit, lending practices, interest rates and unemployment rates. Demand for new homes, farm income, commercial development and highway infrastructure spending have a direct impact on our financial condition and results of operations. Accordingly, the following factors may have a direct impact on our business in the markets in which our products are sold:

•

the strength of the economy;

•

the amount and type of non-residential and residential construction;

•

funding for infrastructure spending;

•

farm income and agricultural land values;

•

inventory of improved housing lots;

•

changes in raw material prices;

•

the availability and cost of credit;

•

non-residential occupancy rates;

•

commodity prices; and

•

demographic factors such as population growth and household formation.

Product Pricing

The price of our products is impacted by competitive pricing dynamics in our industry as well as by raw material input costs. Our industry is highly competitive and the sales prices for our products may vary based on the sales policies of our competitors. Raw material costs represent a significant portion of the cost of goods sold for our pipe products, or Pipe. We aim to increase our product selling prices in order to cover raw material price increases, but the inability to do so could impact our profitability. Movements in raw material costs and resulting changes in the selling prices may also impact changes in period-to-period comparisons of net sales.

Material Conversion

Our HDPE and PP pipe and related water management product lines compete with other manufacturers of corrugated polyethylene pipe as well as manufacturers of alternative products made with traditional materials, such as concrete, steel and PVC. Our net sales are driven by market trends, including the continued increase in adoption of thermoplastic corrugated pipe products as a replacement for traditional materials. Thermoplastic corrugated pipe is generally lighter, more durable, more cost effective and easier to install than comparable products made from traditional materials. High performance thermoplastic corrugated pipe represented approximately 25% of the total storm sewer market in 2012, up from what we believe was less than 10% ten years ago and less than 1% twenty years ago. We believe this trend will continue as customers continue to acknowledge the superior attributes and compelling value proposition of our thermoplastic products and expanded regulatory approvals allow for their use in new markets and geographies. In addition, we believe that the recent introduction of PP pipe products will also help accelerate conversion given the additional applications for which our PP pipe products can be used.

We believe the adoption of HDPE and PP pipe outside of the United States and Europe is still in its early stages and represents a significant opportunity for us to continue to increase the conversion to our products from traditional products in these markets, including Canada, Mexico and South America where we operate.

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Growth in Allied Products

Our Allied Products include storm and septic chambers, PVC drainage structures, fittings and filters and water separators. These products complement our pipe product lines and allow us to offer a comprehensive water management solution to our customers and drive organic growth. Our leading market position in pipe products allows us to cross-sell Allied Products effectively. Our comprehensive offering of Allied Products also helps us increase pipe sales in certain markets. Our Allied Products typically carry higher gross margins as compared to our pipe product lines and are less sensitive to increases in resin prices since resin prices represent a smaller percentage of the cost of goods sold for Allied Products.

Our leading position in the pipe market has allowed us to increase organic growth of our Allied Products. We also expect to expand our Allied Product offerings through acquisitions. Sales of Allied Products have increased from $248.6 million for the fiscal year ended March 31, 2013 to $260.2 million for the fiscal year ended March 31, 2014. For fiscal years 2012, 2013 and 2014, we generated sales of Allied Products of $230.7 million, $248.6 million and $260.2 million, respectively.

Raw Material Costs

Our raw material costs and product selling prices fluctuate with changes in the prices of resins utilized in production. Virgin and recycled resins, which are derived either directly or indirectly from crude oil derivatives and natural gas liquids, currently account for over 60% of our cost of goods sold for pipe products. Raw materials account for a significantly smaller percentage of the cost of our Allied Products. We actively manage our resin purchases and typically pass fluctuations in the cost of resin through to our customers in order to maximize our profitability. Fluctuations in the price of crude oil and natural gas prices may impact the cost of resin. For example, the weighted average market cost for the types of resin that we use increased by approximately 7.3%, 0.9% and 6.7% for fiscal years 2012, 2013 and 2014, respectively. In addition, unanticipated changes in and disruptions to existing ethylene or polyethylene capacities could also significantly increase resin prices (such as the aftermath of Hurricanes Katrina and Rita), often within a short period of time, even if crude oil and natural gas prices remain low. Our ability to pass through raw material price increases to our customers may, in some cases, lag the increase in our costs of goods sold. Sharp rises in raw material prices over a short period of time have historically occurred with a significant supply disruption (hurricanes or fires at chemical facilities), which may increase prices to levels that cannot be fully passed through to customers due to pricing of competing products made from different raw materials or the anticipated length of time the raw material pricing will stay elevated. For more information regarding risks relating to our raw material costs, see “Risk Factors—Risks Relating to Our Business.”

We currently purchase in excess of 700 million pounds of virgin and recycled resin annually from over 450 suppliers in North America. As a high-volume buyer of resin, we are able to achieve economies of scale to negotiate favorable terms and pricing. Our purchasing strategies differ based on the material (virgin resin versus recycled material) ordered for delivery to our production locations. The price movements of the different materials also vary, resulting in the need to use a number of strategies to reduce volatility and successfully pass on cost increases to our customer through timely selling price increases when needed.

Our raw material strategies for managing our cost of goods sold include the following:

•

increasing the use of less price-volatile recycled HDPE resin in our pipe products in place of virgin resin;

•

internally processing an increasing percentage of our recycled HDPE resin in order to closely monitor quality and minimize costs (approximately 64% of our recycled HDPE resin was internally processed in fiscal year 2014);

•

managing a resin hedging program targeting monthly fixed price contracts that hedge approximately 50% of our anticipated virgin HDPE resin purchases on a rolling 12 month basis; and

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•

implementing financial hedges for propylene, with a goal of hedging a similar portion of our anticipated virgin PP resin purchases on a rolling 12 month basis.

The goal of these strategies is to reduce the volatility of raw material costs in the future.

We also consume a large amount of energy and other petroleum products in our operations, including the electricity we use in our manufacturing process as well as the diesel fuel consumed in delivering a significant volume of products to our customers through our in-house fleet. As a result, our operating profit also depends upon our ability to manage the cost of the energy and fuel we require, as well as our ability to pass through increased prices or surcharges to our customers.

Seasonality

Our operating results are impacted by seasonality. Historically, sales of our products have been higher in the first and second quarters of each fiscal year due to favorable weather and longer daylight conditions accelerating construction project activity during these periods while fourth quarter results are impacted by the timing of spring in the northern domestic regions and Canada. Seasonal variations in operating results may also be significantly impacted by inclement weather conditions, such as cold or wet weather, which can delay projects, resulting in decreased net sales for one or more quarters, but we believe that these delayed projects generally result in increased net sales during subsequent quarters.

In the non-residential, residential and infrastructure markets in the northern United States and Canada, the construction season typically begins to gain momentum in late March and lasts through November, before winter sets in, significantly slowing the construction markets. In the southern and western United States, Mexico, Central America and South America, the construction markets are less seasonal. The agricultural drainage market is concentrated in the early spring just prior to planting and in the fall just after crops are harvested prior to freezing of the ground in winter.

Currency Exchange Rates

Although we sell and manufacture our products in many countries, our sales and production costs are primarily denominated in U.S. dollars. We have wholly–owned facilities in Canada and Puerto Rico and joint venture facilities in Mexico, Chile, Brazil, Argentina, Colombia and Peru. The functional currencies in the areas in which we have wholly–owned facilities and joint venture facilities are the Canadian dollar, Euro, Mexican peso, Chilean peso, Brazilian real, Argentine peso and Colombian peso, respectively. We have not hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars. From time to time, we use derivatives to reduce our exposure to currency fluctuations. In 2013, we entered into Euro-denominated forwards to hedge transactions related to the procurement of new equipment, which expired prior to March 31, 2014. Also in 2013, our South American Joint Venture entered into multiple non-deliverable forward contracts to reduce its exposure to fluctuations in the U.S. dollar relative to the Chile peso, Argentina peso, Colombia peso and Brazil real.

Description of our Segments

We operate a geographically diverse business, serving customers in approximately 90 countries. For fiscal year 2014, approximately 88% ($935.4 million) of net sales were attributable to customers located in the United States and approximately 12% ($133.6 million) of net sales were attributable to customers outside of the United States.

Our operations are organized into two reportable segments based on the markets we serve: Domestic and International. We generate a greater proportion of our net sales and gross profit in our Domestic segment, which consists of all regions of the United States. We expect the percentage of total net sales and gross profit derived

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from our International segment to continue to increase in future periods as we continue to expand globally. See Note 20, “Business Segments Information,” to our audited consolidated financial statements included elsewhere in this prospectus.

Domestic

In the United States, the markets we serve were strong through 2007, but slowed significantly beginning in 2008 in tandem with the decline in general economic conditions in the United States associated with the global financial crisis. Since 2011, a modest recovery in the markets in the United States has had a favorable impact on our product sales. Our operating results have been, and will continue to be, impacted by macroeconomic trends in the United States. For fiscal years 2012, 2013 and 2014, we generated net sales attributable to our Domestic segment of $888.7 million, $877.7 million, and $935.4 million, respectively.

International

Our International segment manufactures and markets products in regions outside of the United States, with a growth strategy focused on our owned facilities in Canada and those markets serviced through our joint ventures in Mexico, Central America and South America. Pipe manufactured in these countries is primarily sold into the same region. Our joint venture strategy has provided us with local and regional access to new markets. The outlook for our International segment has improved. Since 2011, a modest recovery in the international markets has had a favorable impact on our product sales, which experienced year-over-year growth in each of fiscal years 2013 and 2014. For fiscal years 2012, 2013 and 2014, we generated net sales attributable to our International segment of $125.1 million, $139.3 million and $133.6 million, respectively. Net sales of our South American Joint Venture are accounted for under the equity method and not consolidated for financial reporting purposes. These unconsolidated sales were $57.7 million, $64.8 million and $61.2 million in fiscal years 2012, 2013 and 2014, respectively.

Components of Results of Operations

Net sales

Net sales consist of the consideration received or receivable for the sale of products in the ordinary course of our business and is presented net of rebates and discounts. We derive our net sales from selling Pipe and Allied Products. We ship products to customers primarily by our internal fleet of trucks with a much smaller portion being shipped by third-party carriers. Net sales are recognized when delivery has occurred or services have been rendered, price to the buyer is fixed and determinable and collectability is reasonably assured. In fiscal year 2014, we served approximately 17,000 customers and no single customer generated more than 10% of our total net sales.

Cost of goods sold

Cost of goods sold consists of the direct cost of raw materials and labor used in the manufacture of our products as well as indirect costs such as labor, depreciation, insurance, supplies, tools, repairs and shipping and handling. Our principal products are manufactured primarily from polyethylene and polypropylene resins with chemical additives that enable the end products to better resist weathering, ultraviolet degradation and chemical exposure. For Pipe, the majority of the cost to manufacture and deliver the products are variable in nature including raw materials, processing costs (including direct labor) and delivery costs (freight). Our fixed production costs (including facility overhead, depreciation, etc.) currently represent approximately 10% of net sales. For Allied Products, cost of goods sold varies by product line and consists of raw material/purchase costs, processing costs and delivery costs.

Selling Expenses

Selling expenses consist of personnel costs (salaries, benefits and variable sales commissions), travel and entertainment expenses, marketing, promotion and advertising expenses, as well as bad debt provisions.

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General and Administrative Expenses

General and administrative expenses consist of personnel costs (salaries, benefits and other personnel-related expenses, including stock-based compensation), recruitment and relocation expenses, accounting and legal fees, business travel expenses, rent and utilities for the administrative offices, director fees, investor relations, membership fees, office supplies, insurance and other miscellaneous expenses.

Intangibles Amortization

Intangibles amortization consists of the amortization of intangibles purchased as part of business combinations, acquired technology, patents and technology licenses, which are amortized using the straight-line method over their estimated useful lives.

Interest Expense

Interest expense consist of interest payment on our Credit Facilities, including our Senior Loan Facilities, Senior Notes and the amortizing of deferred financing costs related to debt borrowings. See Note 10 to our consolidated financial statements included elsewhere in this prospectus.

Income Tax Expense

Income tax expense consists of federal, state, local and foreign taxes based on income in multiple jurisdictions, including the United States, Canada, Mexico, Chile, Brazil and Puerto Rico. We expect our effective tax rate to decrease over time as our earnings grow reducing the impact of permanent M’s in our Domestic tax calculations.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA, including Segment EBITDA and Segment Adjusted EBITDA, which are non-GAAP financial measures, have been presented in this prospectus as supplemental measures of financial performance that are not required by, or presented in accordance with generally accepted accounting principles or GAAP. We calculate EBITDA as net income attributable to ADS before interest, income taxes, depreciation and amortization. We calculate Adjusted EBITDA as EBITDA before stock-based compensation expense, non-cash charges and certain other expenses.

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evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as stock based compensation expense, derivative fair value adjustments, and foreign currency transaction losses. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using EBITDA and Adjusted EBITDA supplementally. Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to Net income, the most comparable GAAP measure, for each of the periods indicated:


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012			2013			2014
Net income attributable to ADS	$	43,260		$	28,159		$	11,124
Depreciation and amortization ^(a)		59,356			56,926			57,454
Interest expense		21,837			16,095			16,141
Income tax expense		27,064			16,894			22,575

EBITDA		151,517			118,074			107,294
Derivative fair value adjustments ^(b)		2,315			(4	)		(53	)
Foreign currency transaction losses ^(c)		378			1,085			845
Gain on sale of Septic Chamber business ^(d)		(44,634	)		—			—
Unconsolidated affiliates interest and tax ^(e)		915			729			204
Management fee to minority interest holder JV ^(f)		—			—			1,098
Special dividend compensation		—			—			22,624
Contingent consideration remeasurement		—			—			259
Stock based compensation ^(g)		1,425			2,592			5,287
ESOP deferred stock based compensation ^(h)		4,957			7,283			7,891
Transaction costs ⁽ⁱ⁾		—			—			1,560

Adjusted EBITDA	$	116,873		$	129,759		$	147,009

(a)

(b)	Represents the non-cash gains and losses arising from changes in mark-to-market values for derivative contracts related to diesel fuel and interest rate swaps. The impact of resin physical and financial derivatives is included in cost of goods sold.

(c)	Represents the gains and losses incurred on purchases, sales and intercompany loans and dividends denominated in non-functional currencies.

(d)	Represents a gain recognized on the sale of our septic chamber business in January 2012.

(e)	Represents our proportional share of income taxes and interest related to our South American Joint Venture and our BaySaver Joint Venture, which are accounted for under the equity method of accounting.

(f)	Represents management fee paid to a minority interest holder of a consolidated subsidiary.

(g)	Represents the non-cash stock based compensation cost related to our stock options and restricted stock awards.

(h)	Represents the non-cash stock based compensation expense attributable to the shares of convertible preferred stock allocated to employee ESOP accounts during the applicable period.

(i)	Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with our recent debt refinancing and in connection with this offering.

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The following table presents a reconciliation of Segment EBITDA and Segment Adjusted EBITDA to Net income, the most comparable GAAP measure, for each of the periods indicated:


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012					2013					2014
	Domestic			International		Domestic			International		Domestic			International
Net income	$	37,894		$	5,366	$	18,332		$	9,827	$	6,084		$	5,040
Depreciation and amortization ^(a)		52,832			6,524		50,691			6,235		50,808			6,646
Interest expense		21,597			240		16,045			50		16,093			48
Income tax expense		25,855			1,209		14,787			2,107		20,594			1,981

Segment EBITDA		138,178			13,339		99,855			18,219		93,579			13,715
Derivative fair value adjustments ^(b)		2,315			—		(4	)		—		(53	)		—
Foreign currency transaction losses ^(c)		—			378		—			1,085		—			845
Gain on sale of Septic Chamber business ^(d)		(44,634	)		—		—			—		—			—
Unconsolidated affiliates interest and tax ^(e)		—			915		—			729		8			196
Management fee to minority interest holder JV ^(f)		—			—		—			—		—			1,098
Special Dividend compensation expense		—			—		—			—		22,624			—
Contingent consideration remeasurement		—			—		—			—		259			—
Share based compensation ^(g)		1,425			—		2,592			—		5,287			—
ESOP deferred compensation ^(h)		4,957			—		7,283			—		7,891			—
Transaction costs ⁽ⁱ⁾		—			—		—			—		1,560			—

Segment Adjusted EBITDA	$	102,241		$	14,632	$	109,726		$	20,033	$	131,155		$	15,854

(a)

(b)	Represents the non-cash gains and losses arising from changes in mark-to-market values for derivative contracts related to diesel fuel and interest rate swaps. The impact of resin physical and financial derivatives is included in cost of goods sold.

(c)	Represents the gains and losses incurred on purchases, sales and intercompany loans and dividends denominated in non-functional currencies.

(d)	Represents a gain recognized on the sale of our septic chamber business in January 2012.

(e)	Represents our proportional share of income taxes and interest related to our South American Joint Venture and our BaySaver Joint Venture, which are accounted for under the equity method of accounting.

(f)	Represents management fee paid to a minority interest holder of a consolidated subsidiary.

(g)	Represents the non-cash stock based compensation cost related to our stock options and restricted stock awards.

(h)	Represents the non-cash stock based compensation expense attributable to the shares of convertible preferred stock allocated to employee ESOP accounts during the applicable period.

(i)	Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with our recent debt refinancing and in connection with this offering.

System-Wide Net Sales

System-Wide Net Sales is a non-GAAP measure which equals the sum of the net sales of our Domestic and International segments plus all net sales from our unconsolidated joint ventures (our South American Joint Venture and our BaySaver Joint Venture). We use this metric to measure the overall performance of our business across all of our geographies and markets we serve.

Our South American Joint Venture is managed as an integral part of our International segment and our BaySaver Joint Venture is managed as an integral part of our Domestic segment. However, they are not consolidated under GAAP. System-Wide Net Sales is prepared as if our South American Joint Venture and our BaySaver Joint Venture were accounted for as consolidated subsidiaries for management and segment reporting purposes.

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The reconciliation of our System-Wide Net Sales to net sales is as follows:


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012		2013		2014
Reconciliation of System-Wide Net Sales to Net Sales:
Net sales	$	1,013,756	$	1,017,041	$	1,069,009
Net sales associated with our unconsolidated affiliates:
South American Joint Venture ^(a)		57,687		64,834		61,243
BaySaver Joint Venture ^(b)		—		—		5,195

System-Wide Net Sales	$	1,071,443	$	1,081,875	$	1,135,447

(a)	On July 31, 2009, we entered into an arrangement to form our South American Joint Venture.

(b)	On July 15, 2013, we entered into an arrangement to form our BaySaver Joint Venture.

Results of Operations

Fiscal Year Ended March 31, 2014 Compared with Fiscal Year Ended March 31, 2013

The following table summarizes certain financial information relating to our operating results that have been derived from our consolidated financial statements for the fiscal years ended March 31, 2014 and 2013. Also included is certain information relating to the operating results as a percentage of net sales. We believe this presentation is useful to investors in comparing historical results.


(Amounts in thousands)	Fiscal Year Ended March 31, 2013			%of Net Sales			Fiscal Year Ended March 31, 2014			%of Net Sales			% Variance
Consolidated Statements of Income data:
Net sales	$	1,017,041			100.0	%	$	1,069,009			100.0	%		5.1	%
Cost of goods sold		807,730			79.4			856,118			80.1			6.0

Gross profit		209,311			20.6			212,891			19.9			1.7
Selling expenses		69,451			6.8			75,024			7.0			8.0
General and administrative expenses		67,712			6.7			78,478			7.3			15.9
Gain on sale of assets/business		(2,210	)		(0.2	)		(5,338	)		(0.5	)		141.5
Intangible amortization		11,295			1.1			11,412			1.1			1.0

Income from operations		63,063			6.2			53,315			5.0			(15.5	)
Interest expense		16,095			1.6			16,141			1.5			0.2
Other miscellaneous expenses, net		283			0.0			133			0.0			(53.0	)

Income before income taxes		46,685			4.6			37,041			3.5			(20.7	)
Income tax expense		16,894			1.7			22,575			2.1			33.6
Equity in net (income) loss of unconsolidated affiliates		(387	)		(0.0	)		1,592			0.1			(511.4	)

Net income		30,178			3.0			12,874			1.2			(57.3	)
Less net income attributable to the non-controlling interests		2,019			0.2			1,750			0.2			(13.3	)

Net income attributable to ADS	$	28,159			2.8	%	$	11,124			1.0	%		(60.5	)%

Other financial data:
Adjusted EBITDA		129,759			12.8	%		147,009			13.8	%		13.3	%
System-Wide Net Sales		1,081,875			106.4	%		1,135,447			106.2	%		5.0	%

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Net sales

Net sales totaled $1,069.0 million in fiscal year 2014, increasing $52.0 million, or 5.1%, as compared to fiscal year 2013. Our Domestic sales increased $57.6 million, or 6.6%, as compared to fiscal year 2013 due to increases in Pipe and Allied Product sales of $46.6 million, or 7.1%, and $11.0 million, or 4.9%, respectively. Continued strong recovery in our markets, impacted by an increase in residential construction, modest increases in nonresidential construction and further gains from conversion to our products from traditional products, were the primary drivers of the increase in the volume of Domestic Pipe and Allied Product sales. Pipe selling prices increased 1.0% as compared to the prior year. The increase in Domestic Pipe and Allied Product sales was partially offset by lower International sales, which declined $5.7 million, or 4.1%, to $133.6 million in fiscal year 2014 as compared to $139.3 million in the prior year. International Pipe sales were primarily lower in Mexico due to the impact of the loss of a national certification (which has since been regained in December 2013) and in Canada due to weather conditions and slower construction markets. System-Wide Net Sales were $1,135.4 million in fiscal year 2014, an increase of $53.5 million, or 5.0%, over System-Wide Net Sales of $1,081.9 million in fiscal year 2013. Net sales at our South American Joint Venture were relatively flat in fiscal year 2014.

Gross profit

Gross profit increased $3.6 million, or 1.7%, to $212.9 million during fiscal year 2014 as compared to $209.3 million during fiscal year 2013. Compensation expense relating to the one-time special dividend paid in January 2014 resulted in a one-time expense of $13.9 million, reducing our gross profit in fiscal year 2014. Excluding the compensation expense charge in fiscal year 2014, gross profit increased $17.5 million or 8.4% as compared to fiscal year 2013. The increase in gross profit was primarily driven by growth in Domestic Pipe and Allied Product sales which resulted in an increase in Domestic gross profit of $19.0 million, or 10.7%, in fiscal year 2014 compared to fiscal year 2013 excluding the compensation expense in fiscal year 2014. Gross profit from our International segment decreased $1.5 million, or 4.9%, due to lower sales volume in Canada and Mexico. Gross profit as a percentage of net sales, which we refer to as gross margin, increased to 21.2% from 20.6% (excluding the 1.3% negative impact of the compensation expense charge) due primarily to increased sales of Allied Products, which typically carry a higher gross margin, as well as lower Domestic freight costs. Allied Products sales grew 4.6% in fiscal year 2014 compared to Pipe sales growing 5.3% in the same period. Domestic freight costs declined to 10.0% of Domestic net sales in fiscal year 2014 as compared to 10.5% of Domestic net sales in fiscal year 2013. The decrease in Domestic freight costs was partially offset by increased Domestic Pipe raw material prices of 4.6% due to higher virgin raw material prices in the second half of fiscal year 2014, which we were not able to immediately pass through to customers during the period due to pricing of competing products made from different raw materials.

Selling expenses

Selling expenses increased $5.5 million, or 8.0%, to $75.0 million during fiscal year 2014 compared to $69.5 million in fiscal year 2013. As a percentage of net sales, selling expenses totaled 7.0% of net sales in fiscal year 2014 compared to 6.8% of net sales in fiscal year 2013. Selling expenses were impacted by a one-time charge of $4.6 million for compensation expense relating to the one-time special dividend paid in January 2014 and an increase in International selling expenses of $0.8 million during the period. Domestic selling expenses were relatively flat in fiscal year 2014 as compared to fiscal year 2013 (excluding the impact of compensation expense).

General and administrative expenses

General and administrative expenses increased $10.8 million, or 15.9%, to $78.5 million in fiscal year 2014 compared to $67.7 million in fiscal year 2013. As a percentage of net sales, general and administrative expenses totaled 7.3% of net sales in fiscal year 2014 compared to 6.7% of net sales in fiscal year 2013. This increase was due to non-cash stock based compensation expense which increased by $2.7 million, $4.1 million of compensation expense relating to the one-time special dividend paid in January 2014, $1.4 million for audit fees

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related to this offering, increases in personnel costs of $1.5 million due to additional headcount and compensation tied to company performance, higher legal and consulting fees of $1.1 million.

Gain on sales of assets/business

Gains on the sale of assets totaled $5.3 million in fiscal year 2014 compared to $2.2 million in fiscal year 2013. Assets sold in fiscal year 2014 included our Draintech product line, a precast facility in Pennsylvania and an idled pipe plant in North Carolina.

Intangibles amortization

Intangibles amortization totaled $11.4 million in fiscal year 2014 compared to $11.3 million in fiscal year 2013. The $0.1 million increase was due to the amortization of intangibles from recent acquisitions.

Interest expense

Interest expense stayed constant at $16.1 million in both fiscal years 2014 and 2013.

Other miscellaneous (income) expenses, net

Our miscellaneous (income)/expense decreased $0.2 million in fiscal year 2014 to net expense of $0.1 million compared to $0.3 million in fiscal year 2013.

Income tax expense

The provision for income taxes totaled $22.6 million in fiscal year 2014 compared to $16.9 million in fiscal year 2013, an increase of $5.7 million or 33.7%. Our effective tax rate was 60.9% in fiscal year 2014 compared to 35.9% in fiscal year 2013. The increase in our effective tax rate was primarily driven by the expected special dividend payment to participants in the ESOP, which increased our effective tax rate by 21.1%.

Income attributed to non-controlling interests

Income attributed to non-controlling interests decreased $0.2 million, or 13.3%, to $1.8 million in fiscal year 2014 compared to $2.0 million in fiscal year 2013. Non-controlling interests are held in our International operations which generated lower earnings in fiscal year 2014 compared fiscal year 2013.

Net income attributed to ADS

Net income attributable to ADS was $11.1 million in fiscal year 2014, a decrease of $17.0 million, or 60.5%, compared to fiscal year 2013. The impact of the compensation expense relating to the one-time special dividend paid in January 2014 had a negative impact of $22.6 million in fiscal year 2014.

Adjusted EBITDA

Adjusted EBITDA totaled $147.0 million in fiscal year 2014, an increase of $17.2 million, or 13.3%, compared to $129.8 million in fiscal year 2013. Domestic Adjusted EBITDA increased $21.5 million, or 19.5%, to $131.2 million in fiscal year 2014 compared to $109.7 million in fiscal year 2013. International Adjusted EBITDA declined $4.1 million in fiscal year 2014 to $15.9 million compared to $20.0 million in fiscal year 2013. Adjusted EBITDA as a percentage of net sales increased to 13.8% in fiscal year 2014 compared to 12.8% in fiscal year 2013.

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Fiscal Year Ended March 31, 2013 Compared with Fiscal Year Ended March 31, 2012

The following table summarizes certain financial information relating to our operating results that have been derived from our consolidated financial statements for fiscal years 2013 and 2012. Also included is certain information relating to the operating results as a percentage of net sales. We believe this presentation is useful to investors in comparing historical results.


(Amounts in thousands)	Fiscal Year Ended March 31, 2012			% of Net Sales			Fiscal Year Ended March 31, 2013			% of Net Sales			% Variance
Consolidated Statements of Income data:
Net sales	$	1,013,756			100.0	%	$	1,017,041			100.0	%		0.3	%
Cost of goods sold		818,398			80.7			807,730			79.4			(1.3	)

Gross profit		195,358			19.3			209,311			20.6			7.1
Selling expenses		67,625			6.7			69,451			6.8			2.7
General and administrative expenses		65,927			6.5			67,712			6.7			2.7
Gain on sale of assets/business		(44,634	)		(4.4	)		(2,210	)		(0.2	)		(95.0	)
Intangible amortization		11,387			1.1			11,295			1.1			(0.8	)

Income from operations		95,053			9.4			63,063			6.2			(33.7	)
Interest expense		21,837			2.2			16,095			1.6			(26.3	)
Other miscellaneous (income) expenses, net		2,425			0.2			283			0.0			(88.3	)

Income before income taxes		70,791			7.0			46,685			4.6			(34.1	)
Income tax expense		27,064			2.7			16,894			1.7			(37.6	)
Equity in net (income) loss of unconsolidated affiliates		(704	)		(0.1	)		(387	)		(0.0	)		(45.0	)

Net income		44,431			4.4			30,178			3.0			(32.1	)
Less net income attributable to the non-controlling interests		1,171			0.1			2,019			0.2			72.4

Net income attributable to ADS	$	43,260			4.3	%	$	28,159			2.8	%		(34.9	)%

Other Data:
Adjusted EBITDA		116,873			11.5	%		129,759			12.8	%		11.0	%
System-Wide Net Sales		1,071,443			105.7	%		1,081,875			106.4	%		1.0	%

Net sales

Net sales totaled $1,017.0 million in fiscal year 2013, an increase of $3.3 million, or 0.3%, compared to $1,013.8 million in fiscal year 2012. The increase in net sales was attributable primarily to an increase in the selling price of our Domestic Pipe, which contributed $20.5 million to net sales in fiscal year 2013, and an $13.9 million, or 6.6%, increase in sales of Domestic Allied Products, partially offset by a decline in the volume of Domestic Pipe sales in fiscal year 2013. The $45.0 million decline in Domestic Pipe sales volume was partially a result of weather related issues impacting agriculture sales (a late start to spring at the end of fiscal year 2013 delayed the agricultural installation season) and N-12 sales in the midwest and northeast regions of the country. The decline in our sales volume was also attributable to a soft non-residential end market, while partially offset by increased demand from the residential end market and continued conversion to our products from traditional materials. Our International net sales totaled $139.3 million in fiscal year 2013 compared to $125.1 million in fiscal year 2012, an increase of $14.2 million, or 11.4%. Growth was experienced across most international markets, led by Canada, with International Pipe sales increasing $10.2 million, or 9.8%, in fiscal year 2013 compared to fiscal year 2012 and Allied Products increasing $4.0 million, or 18.9%, in fiscal year 2013 compared to fiscal year 2012. System-Wide Net Sales were $1,081.9 million in fiscal year 2013, an increase of $10.5 million, or 1.0%, over System-Wide Net Sales of $1,071.4 million in fiscal year 2012. Net sales at our South American Joint Venture totaled $64.8 million in fiscal year 2013 compared to $57.7 million in fiscal year 2012. Pipe market penetration in Brazil led the increase, partially offset by weaknesses in Pipe sales to the copper mining markets in Chile.

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Gross profit

Gross profit increased $14.0 million, or 7.1%, to $209.3 million during fiscal year 2013 as compared to $195.4 million in fiscal year 2012. Our Domestic gross profit increased $7.2 million in fiscal year 2013 as compared to fiscal year 2012 due to increased volume of Allied Products sales, which contributed additional gross profit of $7.5 million, partially offset by a decrease in the volume of Domestic Pipe sales, which negatively impacted gross profit by $0.3 million. International gross profit increased 27.2%, or $6.8 million, in fiscal year 2013 due to increases of $2.7 million and $4.1 million for Pipe and Allied Products gross profit, respectively. Gross margin increased to 20.6% in fiscal year 2013 from 19.3% in fiscal year 2012 due to increased sales of our higher margin Allied Products as well as increased Pipe gross margins attributable to lower freight costs and increased selling prices. Allied Products sales grew 7.8% in fiscal year 2013 totaling 24.4% of net sales compared to 22.8% in fiscal year 2012 as our market penetration for these products increased. Domestic Pipe selling prices increased 3.3% in fiscal year 2013, with gross margin being partially offset by a 1% increase in raw material prices as compared to fiscal year 2012. Freight costs declined slightly to 9.8% of net sales in fiscal year 2013 as compared to 9.9% of net sales in fiscal year 2012.

Selling expenses

Selling expenses increased $1.8 million, or 2.7%, to $69.5 million during fiscal year 2013 compared to $67.6 million in fiscal year 2012. As a percentage of net sales, selling expenses totaled 6.8% in fiscal year 2013 compared to 6.7% in fiscal year 2013. Commissions increased $0.4 million, field selling expenses increased $1.0 million and customer service expenses increased $0.5 million in fiscal year 2013 as compared to fiscal year 2012.

General and administrative expenses

General and administrative expenses increased $1.8 million, or 2.7%, to $67.7 million during fiscal year 2013 compared to $65.9 million in fiscal year 2012. General and administrative expenses increased to 6.7% of net sales in fiscal year 2013, up from 6.5% of net sales in fiscal year 2012. This increase was due to stock based compensation expense which increased by $1.2 million, higher plant administrative expenses of $0.8 million due to recently opened manufacturing facilities in the agricultural markets and higher other administrative expenses of $1.7 million, partially offset by lower transaction costs of $1.9 million in fiscal year 2013 as compared to fiscal year 2012.

Gain on sale of assets/business

We recognized a gain of $2.2 million in fiscal year 2013 resulting from the sale of our plastic edging product line as compared to a $44.6 million gain recognized in fiscal year 2012 resulting from the sale of our septic chamber product line to Infiltrator Systems. As part of the sale in fiscal year 2012, we entered into a Distribution Agreement to continue to sell septic chambers manufactured by Infiltrator Systems.

Intangibles amortization

Intangibles amortization totaled $11.3 million in fiscal year 2013, down $0.1 million from intangible amortization in fiscal year 2012.

Interest expense

Interest expense decreased $5.7 million, or 26.3%, to $16.1 million during fiscal year 2013 as compared to $21.8 million in fiscal year 2012. The decrease was due to a combination of lower average debt and interest rates in fiscal year 2013 as compared to fiscal year 2012. In fiscal year 2013, ADS achieved a leverage ratio of Adjusted EBITDA to Debt below 3-to-1 which reduced our interest rates by 0.5% for our Senior Loan Facilities and 2.0% for our Senior Notes, resulting in a decrease in interest expense of $3.4 million or 15.6%.

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Other miscellaneous (income) expenses, net

Our miscellaneous (income)/expense decreased $2.1 million in fiscal year 2013 as mark to market losses on our fuel and interest rate hedges of $2.3 million in fiscal year 2012 compared to no change in fiscal year 2013. Earnings from our unconsolidated South American Joint Venture declined $0.3 million in fiscal year 2013 and other miscellaneous expenses increased $0.2 million in fiscal year 2013 as compared to fiscal year 2012.

Income tax expense

The provision for income taxes totaled $16.9 million in fiscal year 2013 compared to $27.1 million in fiscal year 2012, a decrease of $10.2 million, or 37.6%. Our effective tax rate was 35.9% in fiscal year 2013 compared 37.9% in fiscal year 2012. The primary factors for the decline in our effective tax rate were lower state and local taxes (3.0% in fiscal year 2013 compared to 3.6% in fiscal year 2012) and an increase in International income which is taxed at lower rates.

Income attributed to non-controlling interests

Income attributed to non-controlling interests increased $0.8, or 72.4%, to $2.0 million in fiscal year 2013 as compared to $1.2 million in fiscal year 2012. Non-controlling interests are held in our International operations which generated higher earnings in fiscal year 2013 compared to fiscal year 2012.

Net income attributed to ADS

Net income attributable to ADS was $28.2 million in fiscal year 2013, a decrease of $15.1 million, or 34.9%, compared to fiscal year 2012. This decrease was primarily due to the $44.6 million gain from the sale of our U.S. septic chamber business in fiscal year 2012.

Adjusted EBITDA

Adjusted EBITDA totaled $129.8 million in fiscal year 2013, an increase of $12.9 million, or 11.0%, compared to $116.9 million in fiscal year 2012. Domestic Adjusted EBITDA increased $7.5 million, or 7.3%, to $109.7 million in fiscal year 2013 compared to $102.2 million in fiscal year 2012. International Adjusted EBITDA increased $5.4 million in fiscal year 2013 to $20.0 million as compared to $14.6 million in fiscal year 2013. Adjusted EBITDA as a percentage of net sales increased to 12.8% in fiscal year 2013 compared to 11.5% in fiscal year 2012.

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Results of Operations by Segment

The following table presents our net sales, net sales as a percentage of total net sales, Segment Adjusted EBITDA and Segment Adjusted EBITDA as a percentage of total Adjusted EBITDA by segment for the periods presented.


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012				2013				2014
Net Sales by Segment
Domestic:
Pipe	$	678,934	67	%	$	654,068	64	%	$	700,663	66	%
Allied Products		209,736	21	%		223,676	22	%		234,729	22	%

		888,670	88	%		877,744	86	%		935,392	88	%
International:
Pipe		104,107	10	%		114,349	11	%		108,162	10	%
Allied Products		20,979	2	%		24,948	3	%		25,455	2	%

		125,086	12	%		139,297	14	%		133,617	12	%

Total net sales	$	1,013,756	100	%	$	1,017,041	100	%	$	1,069,009	100	%

Segment Adjusted EBITDA
Domestic	$	102,241	87	%	$	109,726	85	%	$	131,155	89	%
International		14,632	13	%		20,033	15	%		15,854	11	%

Total Adjusted EBITDA	$	116,873	100	%	$	129,759	100	%	$	147,009	100	%

Quarterly Net Sales Information

The following tables set forth certain historical unaudited consolidated quarterly net sales for each of the quarters during the years ended March 31, 2013 and March 31, 2014. This unaudited information has been prepared on a basis consistent with our annual financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of the unaudited quarterly data. This information should be read together with our consolidated financial statements and the related notes, included elsewhere in this prospectus. The results of operations for any quarter are not necessarily indicative of results that we may achieve for any subsequent periods.


(Amounts in thousands)	Quarters Ended During the Fiscal Year Ended March 31, 2013		Quarters Ended During the Fiscal Year Ended March 31, 2014
Net Sales by Quarter
Three months ended June 30	$	298,390	$	293,102
Three months ended September 30		285,749		333,495
Three months ended December 31		248,425		261,180
Three months ended March 31		184,477		181,232

Total net sales	$	1,017,041	$	1,069,009

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Supplemental U.S. End Market Net Sales Information

The following U.S. end market net sales information is estimated by us based on our own net sales information as well as data that is provided to us by industry sources, including Freedonia and our distribution network. With a diverse base of customers who in some cases may service multiple end markets, the assignment of net sales to a specific end market requires the use of estimates and judgment. Therefore, although we believe the following to be reliable, actual results may differ from those reported.

The following table presents our total net sales in the following U.S. end markets for each of the periods indicated as well as the corresponding compounded annual growth rates, or CAGR, from fiscal year 2010 to fiscal year 2014:


	Fiscal Year Ended March 31,														CAGR from Fiscal Year 2010 to Fiscal Year 2014
(Amounts in millions)	2010		2011			2012			2013			2014			CAGR from Fiscal Year 2010 to Fiscal Year 2014
U.S. (domestic) end markets:
Non-Residential Construction	$	326	$	361		$	420		$	430		$	480			10.1	%
Residential Construction		154		160			172			184			194			6.0	%
Agriculture		80		136			211			184			176			21.8	%
Infrastructure		78		82			86			79			85			2.2	%

Total		638		738			889			878			935			10.0	%

% Change from Prior Fiscal Year		n/a		15.7	%		20.4	%		(1.3	)%		6.6	%

The foregoing table presents our total net sales in certain domestic end markets and does not include any net sales information for our International segment.

We estimate that from fiscal year 2010 to fiscal year 2014 the size of the non-residential construction market served by us in the United States declined at an overall CAGR of approximately 6%, the size of the residential construction market served by us in the United States increased at an overall CAGR of approximately 3%, the size of the agriculture market served by us in the United States increased at an overall CAGR of approximately 17% and the size of the infrastructure market served by us in the United States declined at an overall CAGR of approximately 4%.

Liquidity and Capital Resources

Our primary liquidity requirements are working capital, capital expenditures, debt service, and dividend payments for our convertible preferred stock and common stock. We have historically funded, and expect to continue to fund, our operation primarily through equity issuance, internally generated cash flow and debt financings. From time to time we may explore additional financing methods and other means to raise capital. There can be no assurance that any additional financing will be available to us on acceptable terms or at all.

As of March 31, 2014, we had $3.9 million in cash that was held by our foreign subsidiaries. Our intent is to indefinitely reinvest our earnings in foreign subsidiaries. In the event that foreign earnings are repatriated, these amounts will be subject to income tax liabilities in the appropriate tax jurisdiction. No restrictions exist on our liquidity that is impacted by the significance of cash held by foreign subsidiaries.

Working Capital and Cash Flows

During fiscal year 2014, our source of funds was primarily driven by an increase in borrowings on our Revolving Credit Facility. During fiscal year 2014, our use of cash was primarily driven by payment of dividends and continued investment in capital expenditures. During fiscal year 2013, our use of cash was primarily driven by increased capital expenditures. During fiscal year 2012, our use of cash was primarily driven by net acquisition activity.

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As of March 31, 2014, we had $84.3 million in liquidity, including $3.9 million of cash and cash equivalents and $80.4 million in borrowings available under our Revolving Credit Facility, described below. We believe that our cash on hand, together with the availability of borrowings under our Revolving Credit Facility and other financing arrangements and cash generated from operations, will be sufficient to meet our working capital requirements, anticipated capital expenditures, scheduled interest payments on our indebtedness and dividend payment requirement for our convertible preferred stock for at least the next twelve months. We are not dependent on this offering to meet our liquidity needs during that period.

As of March 31, 2014, we had total consolidated indebtedness of approximately $454.0 million. We anticipate that we will repay a portion of our outstanding indebtedness with the proceeds from this offering. See “Use of Proceeds.”

The following table sets forth the major sources and uses of cash for each of the periods presented:


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012			2013			2014
Statement of Cash Flows data:
Net cash provided by operating activities	$	56,997		$	68,215		$	62,122
Net cash (used in) investing activities		(35,833	)		(47,199	)		(41,767	)
Net cash (used in) financing activities		(21,233	)		(21,737	)		(17,712	)

Working Capital

Working capital is an indication of liquidity and potential need for short-term funding. We define working capital as the difference between our current assets and current liabilities.

Working capital increased to $263.9 million as of March 31, 2014, from $220.3 million as of March 31, 2013, primarily due to higher inventories and accounts receivable, while accounts payable and accrued expenses changed only a nominal amount.

Working capital increased to $220.3 million as of March 31, 2013, from $208.3 million as of March 31, 2012, primarily due to higher inventories which offset a decrease in accounts receivable.

Operating Cash Flows

Cash flow from operating activities for fiscal year 2014 was $62.1 million as compared with cash provided by operating activities of $68.2 million for fiscal year 2013. The primary factors impacting operating cash flow during fiscal year 2014 was an increase in accounts receivable as well as an increase in inventories. The increase in accounts receivable was attributable to stronger March 2014 sales as compared to the prior year while the increase in inventories was attributable to adverse weather conditions causing a delay in construction projects and higher raw material costs in March 2014, as compared to March 2013, impacting both raw material and finished goods inventory values.

Cash flow from operating activities in fiscal year 2013 was $68.2 million as compared with cash generated by operating activities of $57.0 million for fiscal year 2012. The primary factors impacting operating cash flow for fiscal year 2012 was improved operating margins and changes in working capital, including an increase in inventories and a decrease in receivables. The increase in inventories was attributable to lower sales in the fourth quarter of fiscal year 2013, as compared to the fourth quarter of fiscal year 2012, than was planned, which also resulted in the corresponding decline in receivables as of March 31, 2013, as compared to March 31, 2012.

Investing Cash Flows

During fiscal year 2014, cash used for investing activities was $41.8 million, primarily due to capital expenditures in support of operations and an investment in an unconsolidated joint venture. During fiscal year 2013, cash used for investing activities was $47.2 million, primarily due to capital expenditures in support of operations.

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During fiscal year 2013, cash used in investing activities was $47.2 million, primarily driven by capital expenditures ($40.0 million).

During fiscal year 2012, cash used in investing activities was $35.8 million, primarily driven by capital expenditures ($26.5 million) and net acquisition activity ($8.8 million).

Financing Cash Flows

During fiscal year 2014, cash used by financing activities was $17.7 million, primarily from increased borrowings to pay dividends and redeem convertible preferred stock in connection with the ESOP.

During fiscal year 2013, cash used by financing activities was $21.7 million as compared to cash used by financing activities of $21.2 million for fiscal year 2012. Our net cash flow was directed to pay down term debt, dividends, and redemption of our convertible preferred stock in connection with the ESOP.

During the fiscal year 2012, cash used for financing activities was $21.2 million primarily due to payments of term debt, dividends, and redemption of our convertible preferred stock in connection with the ESOP.

Capital Expenditures

We had capital expenditures of $26.5 million, $40.0 million and $40.3 million in fiscal years 2012, 2013 and 2014, respectively. Our capital expenditures in fiscal year 2014 were used primarily to support the growth of HP N-12 pipe production capacity, expansion of our recycled resin initiatives and other capital projects.

We currently anticipate that we will make capital expenditures of approximately $35.0 million in each of fiscal years 2015 and 2016. We expect our total capital expenditures to be relatively similar to the past several fiscal years. Such capital expenditures are expected to be financed using funds generated by operations. As of March 31, 2014, there were no material contractual obligations or commitments related to these planned capital expenditures.

Financing Transactions

Senior Loan Facilities

On September 24, 2010, we entered into a credit agreement with PNC Bank, National Association, or PNC, as administrative agent, and the other lenders parties thereto. The credit agreement, as amended and restated on June 12, 2013 and subsequently further amended, provides for our Senior Loan Facilities consisting of (i) the Revolving Credit Facility providing for revolving loans and letters of credit of up to a maximum aggregate principal amount of $325.0 million and (ii) the Term Loan Facility providing for the Term Loans in an aggregate original principal amount of $100.0 million. The Senior Loan Facilities also permit us to add additional commitments to the Revolving Credit Facility or the Term Loan Facility not to exceed $50 million in the aggregate. The proceeds of the Revolving Credit Facility are primarily used to provide for our ongoing working capital and capital expenditure needs, to finance acquisitions and distributions, and for our other general corporate purposes. The proceeds of the Term Loan Facility were primarily used for our general corporate purposes. The interest rates on the Senior Loan Facilities are determined by certain base rates or LIBOR rates, plus an applicable margin. The obligations under the Senior Loan Facilities are guaranteed by certain of our subsidiaries and secured by substantially all of our personal property assets. For further information about the Senior Loan Facilities, see “Description of Certain Indebtedness — Senior Loan Facilities.” On December 20, 2013, we amended the Revolving Credit Facility to, among other things, permit the payment of a cash dividend. As of March 31, 2014, the outstanding principal drawn on the Revolving Credit Facility was $248.1 million, with $68.4 million available to be drawn, subject to customary conditions precedent. As of March 31, 2014, the outstanding principal balance of the Term Loan was $97.5 million.

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We intend to use the net proceeds from this offering to repay a portion of our outstanding indebtedness under the Revolving Credit Facility.

Mexicana Revolving Credit Facility

On September 24, 2010, our joint venture ADS Mexicana entered into a credit agreement with PNC, as administrative agent, and the other lenders parties thereto. The credit agreement, as amended and restated on June 12, 2013 and subsequently further amended, provides for revolving loans and letters of credit of up to a maximum aggregate principal amount of $12.0 million. The proceeds of the revolving credit facility are primarily used to cover working capital needs. The interest rates of the revolving credit facilities are determined by certain base rates or LIBOR rates, plus an applicable margin. The obligations under the revolving credit facility are guaranteed by us and certain of our subsidiaries and secured by substantially all of our assets. For further information about this credit facility, see “Description of Certain Indebtedness — Mexicana Revolving Credit Facility.” As of March 31, 2014, there was no outstanding principal drawn on the revolving credit facility and the entire $12.0 million was available to be drawn.

Senior Notes

On December 11, 2009, we entered into a private shelf agreement with Prudential Investment Management Inc., or Prudential, which agreement, as amended and restated on September 24, 2010 and subsequently further amended, provides for the issuance by us of senior secured promissory notes to Prudential or its affiliates from time to time in the aggregate principal amount up to $100.0 million. Pursuant to the private shelf agreement, on September 27, 2010, we issued $75.0 million in aggregate principal amount of the 5.60% Senior Series A Notes due September 24, 2018 to repurchase outstanding shares of common stock from certain of our stockholders and to repurchase outstanding shares of convertible preferred stock from the ESOP. On July 24, 2013, we issued $25.0 million in aggregate principal amount of the 4.05% Senior Series B Notes due September 24, 2019 for our general corporate purposes. The Senior Notes are guaranteed by certain of our subsidiaries and secured by substantially all of our assets. For further information about the Senior Notes, see “Description of Certain Indebtedness — Senior Notes.” We have no further amount available for issuance of senior notes under the private shelf agreement. On December 20, 2013, we amended the private shelf agreement to, among other things, make certain amendments in order to permit the payment of a cash dividend.

Covenant Compliance

Our outstanding debt agreements and instruments contain various restrictive covenants including, but not limited to, limitations on additional indebtedness and capital distributions, including dividend payments. The two primary debt covenants include a Leverage Ratio and a Fixed Charge Ratio maintenance covenant. For any relevant period of determination, the Leverage Ratio is calculated by dividing Total Consolidated Indebtedness (funded debt plus guarantees) by Consolidated EBITDA. The current upper limit is 4.0 times. The Fixed Charge Ratio is calculated by dividing the sum of Consolidated EBITDA minus Capital Expenditures minus cash Income Taxes paid, by the sum of Fixed Charges. Fixed Charges include cash Interest expense, scheduled principal payments on Indebtedness, and ESOP Capital Distributions in excess of $10 million in a given fiscal year. The current minimum ratio is 1.25 times. For further information, see “Description of Certain Indebtedness.” We were in compliance with our debt covenants as of March 31, 2014.

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Contractual Obligation as of March 31, 2014


	Payments Due by Period
(Amounts in thousands)	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Contractual obligations:
Long-term debt ⁽¹⁾	$	454,048	$	11,153	$	45,450	$	372,445	$	25,000
Interest payments ⁽²⁾		71,306		18,047		34,576		17,927		756
Operating leases		63,893		18,367		27,618		9,827		8,081
Contractual purchase obligations ⁽³⁾		69,871		69,871		—		—		—

Total	$	659,118	$	117,438	$	107,644	$	400,199	$	33,837

(1)	The current Revolving Credit Facility and Term Loan mature in June, 2018.

(2)	Based on applicable rates and pricing margins as of March 31, 2014, including interest rate swaps.

(3)	Purchase obligations include various commitments with vendors to purchase goods and services, primarily inventory, machinery, supplies and other equipment.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, with the exception of the guarantee of 50% of certain debt of our unconsolidated South American Joint Venture, as further discussed in Note 9 of our Notes to Consolidated Financial Statements. As of March 31, 2014, our South American Joint Venture had approximately $11.1 million of outstanding debt. We do not believe that this guarantee will have a current or future effect on our financial condition, results of operations, liquidity, or capital resources.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, our allowance for doubtful accounts, useful lives of our property, plant and equipment and amortizing intangible assets, valuation allowance on deferred tax assets, reserves for uncertain tax positions, evaluation of goodwill, intangible assets and other long-lived assets for impairment, accounting for stock based compensation and our ESOP, reserves for general liability, workers’ compensation, and medical insurance, cash discounts and customer rebates and valuation of our Redeemable Common Stock and Redeemable Convertible Preferred Stock. Management’s estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current conditions and available information. Management believes the accounting estimates are appropriate and reasonably determined; however, due to the inherent uncertainties in making these estimates, actual results could differ from those estimates.

Consolidation and Investments

Our consolidated financial statements include us, our wholly-owned subsidiaries and VIEs of which we are the primary beneficiary. The non-controlling interests in our subsidiaries that are consolidated but not wholly owned by us are included in the accompanying financial statements. We use the equity method of accounting for equity investments where we exercise significant influence but do not hold a controlling financial interest, including our South American Joint Venture and our BaySaver Joint Venture. Such investments are recorded in Other Assets in the balance sheets and equity earnings are included in Equity Earnings of Unconsolidated Subsidiaries in the statements of income. All intercompany balances and transactions have been eliminated in consolidation.

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Allowance for Doubtful Accounts

We hold receivables from customers in various countries. Credit is extended to customers based on an evaluation of their financial condition and collateral is generally not required. The evaluation of the customer’s financial condition is performed to reduce the risk of loss. Accounts receivable are evaluated for collectability based on numerous factors, including the length of time individual receivables are past due, past transaction history with customers, their credit worthiness and the economic environment. An allowance for doubtful accounts is estimated as a percentage of aged receivables. This estimate is periodically adjusted when management becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in historical collection patterns.

Goodwill

We account for costs of acquired assets in excess of fair value, or Goodwill, and other intangible assets not subject to amortization in accordance with FASB Accounting Standards Codification, or ASC, Topic 350, “Intangibles — Goodwill and Other.” Goodwill is reviewed annually for impairment as of March 31 or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The goodwill impairment analysis is comprised of two steps. The first step requires the comparison of the fair value of the applicable reporting unit to its respective carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and we would not be required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference. With respect to this testing, our reporting units are generally one level below our operating segments for which discrete financial information is available and reviewed by segment management. However, components of an operating segment can be aggregated as one reporting unit if the components have similar economic characteristics. Our reporting units include Domestic, Mexico, Puerto Rico, Canada, Chile and Europe. Implied fair value of goodwill is determined by considering both the income and market approach. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. The fair value estimates are based on assumptions management believes to be reasonable, but are inherently uncertain.

We performed our annual impairment test for goodwill as of March 31, 2014 and we determined that the fair value exceeded the carrying value for each of our reporting units by a substantial margin. Accordingly, we did not incur any impairment expense for goodwill in the years ended 2012, 2013 and 2014.

Intangible Assets

Definite-lived intangible assets are tested for recoverability whenever events or changes in circumstances indicate that carrying amounts of the asset group may not be recoverable. Asset groups are established primarily by determining the lowest level of cash flows available. If the estimated undiscounted future cash flows are less than the carrying amounts of such assets, an impairment loss is recognized to the extent the fair value of the asset less any costs of disposition is less than the carrying amount of the asset. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. Future events and unanticipated changes to assumptions could require a provision for impairment in a future period.

In April 2011, we recharacterized the Hancor trademark previously classified as indefinite lived since 2005 to definite lived based on management’s decision to discontinue to the use of the trademark over the next 15 years. When such a change is made, the asset is required to be tested for impairment. We tested the trademark for impairment using the relief from royalty valuation method and recorded an impairment charge of $3,200 in

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General and administrative expenses in the Consolidated Statements of Income, resulting in the carrying value of the trademark being reduced, and thus equal, to the estimated fair value, which will be amortized over a 15-year period.

No additional impairment charges were recorded in fiscal years 2012, 2013 or 2014.

Indefinite-lived intangible assets are tested for impairment annually as of March 31 or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. We base our fair value estimates on assumptions we believe to be reasonable, but that are inherently uncertain. To estimate the fair value of these indefinite-lived intangible assets, we use an income approach, which utilizes a market derived rate of return to discount anticipated performance. An impairment loss is recognized when the estimated fair value of the intangible asset is less than the carrying value.

We did not record any impairment in fiscal years 2012, 2013 or 2014 other than the Hancor trademark impairment described previously. Future events and unanticipated changes to assumptions could require a provision for impairment in a future period.

Revenue Recognition

We recognize revenue and cost of goods sold when persuasive evidence of an agreement exists, delivery has occurred, the price to the buyer is fixed and determinable and collectability is reasonably assured.

We ship products to customers predominantly by internal fleet and to a lesser extent by third-party carriers. Revenues, net of sales tax and allowances for returns, rebates and discounts are recognized from product sales when title to the products is passed to the customer which generally occurs upon delivery.

Employee Benefit Plans

Employee Stock Ownership Plan (ESOP)

Unallocated shares of convertible preferred stock held by our ESOP in the ESOP’s loan suspense account are allocated each year to employee-participants’ ESOP stock accounts upon the ESOP making its annual ESOP loan payment. The annual allocation of convertible preferred stock to the ESOP stock accounts of ESOP participants is accounted for as share based compensation expense as part of our overall employee benefits expense. Such shares of convertible preferred stock are valued based on an annual valuation completed by management with the assistance of an independent third-party appraisal firm. When shares of convertible preferred stock are allocated to the ESOP stock accounts of ESOP participants, we reduce the amount of deferred compensation reflected in Deferred compensation — unearned ESOP shares in mezzanine equity. The amount of deferred compensation is reduced by the number of allocated shares of convertible preferred stock, multiplied by the value of the convertible preferred stock when originally issued. The difference between the current share value and the original value is credited to the equity account paid in capital.

Stock-Based Compensation Plans

We have several programs for stock based payments to employees and directors in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. Equity-classified awards are measured based on the grant-date estimated fair value of each award, net of estimated forfeitures, and liability-classified awards are re-measured at their fair value, net of estimated forfeitures, at each reporting date for accounting purposes. Compensation expense is recognized over the employee’s requisite service period, which is generally the vesting period of the grant. Compensation expense is recorded for new awards and existing awards that are modified, repurchased or forfeited.

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The fair value of restricted stock equals the fair value of the underlying common stock as of the date of the grant, as discussed in “— Valuation of Redeemable Common Stock and Redeemable Convertible Preferred Stock — Valuation of Redeemable Common Stock.”

The fair value of each stock option granted is estimated, as of the date of the grant, using the Black-Scholes option pricing model. Determining the fair value of stock options under the Black-Scholes option-pricing model requires judgment, including estimating the fair value per share of our common stock as a private company prior to this offering, volatility, expected term of the awards, dividend yield and the risk-free interest rate. The assumptions used in calculating the fair value of stock options represent our best estimates, based on management’s judgment and subjective future expectations. These estimates involve inherent uncertainties. If any of the assumptions used in the model change significantly, stock based compensation recorded for future awards may differ materially from that recorded for awards granted previously.

We developed our assumptions as follows:

•

Fair value of common stock. As our common stock is not publicly traded, we estimate the fair value of common stock as discussed in “— Valuation of Redeemable Common Stock and Redeemable Convertible Preferred Stock — Valuation of Redeemable Common Stock.”

•

Volatility. The expected price volatility for our common stock is estimated by taking the median historic price volatility for industry peers based on daily prices over a period equivalent to the expected term of the stock option grants.

•

Expected term. The expected term represents the period of time that options granted are expected to be outstanding based on historical experience.

•

Risk-free interest rate. The risk-free interest rate is based on the yields of United States Treasury securities with maturities similar to the expected term of the options.

•

Dividend yield. The dividend yield is based on our anticipated dividend payments over the remaining expected holding period.

We estimate potential forfeitures of grants and adjust stock-based compensation expense accordingly. The estimate of forfeitures is adjusted over the requisite service period to the extent that actual forfeitures differ from the prior estimates. We estimate forfeitures based upon our historical experience, and, at each period, review the estimated forfeiture rate and make changes as factors affecting the forfeiture rate calculations and assumptions change.

Valuation of Redeemable Common Stock and Redeemable Convertible Preferred Stock

Valuation of Redeemable Common Stock

Certain of our outstanding shares of common stock are subject to agreements that permit the holder of those shares to put its shares to us for cash. This Redeemable Common Stock is recorded at its fair value in the mezzanine section of our consolidated balance sheets and changes in fair value are recorded in retained earnings. The fair value of our common stock is based on the most recent contemporaneous third-party valuation report, which historically applied industry-appropriate multiples to EBITDA and performed a discounted cash flow analysis. Under the industry-appropriate multiples approach, to arrive at concluded multiples, we considered differences between the risk and return characteristics of us and the guideline companies. Under the discounted cash flow analysis, the cash flows expected to be generated by us are discounted to their present value equivalent using a rate of return that reflects the relative risk of an investment in us, as well as the time value of money. This return is an overall rate based upon the individual rates of return for invested capital (equity and interest-bearing debt). The return, known as the weighted average cost of capital, or WACC, is calculated by weighting the

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required returns on interest-bearing debt and common stock in proportion to their estimated percentages in an expected capital structure. The categorization of the framework used to price this temporary equity is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

Valuation of Redeemable Convertible Preferred Stock

The trustee of our ESOP has the ability to put the shares of our Redeemable Convertible Preferred Stock to us. Our Redeemable Convertible Preferred Stock is recorded at its fair value in the mezzanine section of our consolidated balance sheets and changes in fair value are recorded in retained earnings. Accordingly, we estimated the fair value of the Redeemable Convertible Preferred Stock through estimating the fair value of our common stock and applying certain adjustments including for the fair value of the total dividends to be received and assuming conversion of the preferred stock to common stock at the stated conversion ratio per our certificate of incorporation. The categorization of the framework used to price this temporary equity is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized and represent the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. They are measured using the enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The deferred income tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities. Penalties and interest recorded on income taxes payable are recorded as part of income taxes.

We follow the GAAP guidance for uncertain tax positions within ASC 740, Income Taxes. ASC 740 provides guidance related to the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The standard prescribes the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. Initial recognition, derecognition and measurement is based on management’s judgment given the facts, circumstances and information available at the reporting date. If these judgments are not accurate then future income tax expense or benefit could be different.

Recent Accounting Pronouncements

Fair value measurement

In May 2011, the FASB issued Accounting Standard Update (ASU) No. 2011-04, Fair Value Measurement (Topic 820), which clarifies the measurement of fair value for certain assets and liabilities and expands the disclosure requirements for Level 3 fair value investments. The amendments in this ASU are intended to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and International Financial Reporting Standards. ASU No. 2011-04 became effective for us in fiscal year 2013. The adoption of the amended guidance did not have a material impact on our consolidated financial statements and related disclosures.

Comprehensive income: Presentation

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220), accounting guidance related to the presentation of comprehensive income in ASC 220, Comprehensive Income. The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. Under this guidance, entities are

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required to report the components of net income and comprehensive income either in one continuous statement or in two separate but consecutive statements. The option to present items of other comprehensive income in the statement of changes in equity was eliminated. The guidance became effective for us in fiscal year 2013. We elected to present items of other comprehensive income in two but consecutive statements.

Comprehensive income: Reclassifications

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220), accounting guidance related to the presentation of comprehensive income in ASC 220, Comprehensive Income. This ASU supersedes and replaces the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU 2011-05, which were deferred indefinitely under ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” which was issued in December 2011. The amendments in ASU 2013-02 would require an entity to provide additional information about reclassifications out of accumulated other comprehensive income by the respective line items of net income. For public entities, the provisions of this ASU became effective for reporting periods beginning after December 15, 2012. The adoption of the amended guidance did not have a material impact on our consolidated financial statements and related disclosures.

Income Taxes

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740), which requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carry forward. However, if a net operating loss carry forward, a similar tax loss, or a tax credit carry forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments are not expected to have a material impact on our consolidated financial statements and related disclosures.

Discontinued Operations

In April 2014, the FASB issued authoritative guidance amending existing requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting will be limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. Public entities will apply the amended guidance prospectively to all disposals occurring within annual periods beginning on or after December 15, 2014, and interim periods within those years. We will adopt this standard effective April 1, 2015. Due to the change in requirements for reporting discontinued operations described above, presentation and disclosures of future disposal transactions after adoption maybe different than under current standards.

Quantitative and Qualitative Disclosure About Market Risk

We are subject to various market risks, primarily related to changes in interest rates, raw material supply prices, and to a lesser extent, foreign currency exchange rates. Our financial position, results of operations or cash flows may be negatively impacted in the event of adverse movements in the respective market rates or prices in each of these risk categories. Our exposure in each category is limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions.

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Interest Rate Risk

We are subject to interest rate risk associated with our debt. Changes in interest rates impact the fair value of our fixed-rate debt, but there is no impact to earnings and cash flow. Alternatively, changes in interest rates do not affect the fair value of our variable-rate debt, but they do affect future earnings and cash flow. The Revolving Credit Facility, the Term Loan Facility, and our industrial development revenue bond, or IDRB, notes bear variable interest rates. The Revolving Credit Facility and Term Loan Facility bear interest either at LIBOR or the Prime Rate, at our option, plus applicable pricing margins. The IDRB notes bear interest at weekly commercial paper rates, plus applicable pricing margins. A 1% increase in interest rates on our variable rate debt would increase our annual forecasted interest expense by approximately $2.3 million based on our borrowings as of March 31, 2014. Assuming the Revolving Credit Facility is fully drawn, each 1% increase or decrease in the applicable interest rate would change our interest expense by approximately $2.8 million per year. To mitigate the impact of interest rate volatility, we have two interest rate swaps in effect as of March 31, 2014. The first swap is at $70 million notional value, amortizing $2.5 million per quarter at a fixed LIBOR rate of 1.105%, and expires in September, 2014. The other swap is a $50 million notional value, non-amortizing swap at a LIBOR rate of 0.86% which expires in September, 2016. A third $50 million notional value swap will take effect on September 1, 2014 and expires on September 1, 2016. The rate is at a fixed LIBOR of 1.08%.

Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of accounts receivable. We provide our products to customers based on an evaluation of the customers’ financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. We monitor the exposure for credit losses and maintains allowances for anticipated losses. Concentrations of credit risk with respect to our accounts receivable are limited due to the large number of customers comprising our customer base and their dispersion among many different geographies.

Raw Material and Commodity Price Risk

Our primary raw materials used in the production of our products are polyethylene and polypropylene resins. As these resins are hydrocarbon-based materials, changes in the price of feedstocks, such as crude oil and natural gas, as well as changes in the market supply and demand may cause the cost of these resins to fluctuate significantly. Raw materials account for the majority of our cost of goods sold. Given the significance of these costs and the inherent volatility in supplier pricing, our ability to reflect these changes in the cost of resins in our product selling prices in an efficient manner, passing the increase on to our customers, contributes to the management of our overall supply price risk and the potential impact on our results of operations.

We manage supply risk with financial and physical hedge contracts for the HDPE and PP resins used in the manufacture of our Pipe and Allied Products, as well as for the diesel fuel used by our in-house fleet of delivery trucks. Our physical hedge contracts for HDPE resins are typically at a fixed price and volume over time. We use to a limited extent financial derivatives for PP resin in the form of fixed price swaps based on propylene monomer. For diesel fuel, we have utilized option contracts in the form of collars with put and call options.

We have supply contracts that typically include supply periods of greater than one year. Except for physical-hedged resin contracts, we generally do not enter into long-term purchase orders for the delivery of raw materials. Our orders with suppliers are flexible and do not normally contain minimum purchase volumes or fixed prices. Accordingly, our suppliers may change their selling prices or other relevant terms on a monthly basis, exposing us to pricing risk. Our use of pricing and forecasting tools, centralized procurement, additional sources of supply and incorporation of vertical integration for recycled material have increased our focus on efficiency and resulted in lower overall supply costs. If the price of HDPE and PP virgin resin increased or decreased by 5%, it would result in a material change to our cost of goods sold.

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Inflation

Our cost of goods sold is subject to inflationary pressures and price fluctuations of the raw materials we use, primarily high density polyethylene and polypropylene resins. Historically, we have generally been able over time to recover the effects of inflation and price fluctuations through sales price increases and production efficiencies related to technological enhancements and improvements. However, we cannot reasonably estimate our ability to successfully recover any price increases.

Financial Instruments

We have operations in countries outside of the United States, all of which use the respective local foreign currency as their functional currency. Each of these operations may enter into contractual arrangements with customers or vendors that are denominated in currencies other than its respective functional currency. Consequently, our results of operations may be affected by exposure to changes in foreign currency exchange rates and economic conditions in the regions in which we sell or distribute our products. Exposure to variability in foreign currency exchange rates from these transactions is managed, to the extent possible, by natural hedges which result from purchases and sales occurring in the same foreign currency within a similar period of time, thereby offsetting each other to varying degrees.

In addition, to the transaction-related gains and losses that are reflected within the results of operations, we are subject to foreign currency translation risk, as the financial statements for our foreign subsidiaries are measured and recorded in the respective subsidiary’s functional currency and translated into U.S. dollars for consolidated financial reporting purposes. The resulting translation adjustments are recorded net of tax impact in the Consolidated Statement of Income.

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INDUSTRY

We compete in the multi-billion dollar global pipe and related water management solutions market. Our end markets include non-residential construction, residential construction, agriculture and infrastructure, focused primarily in the United States and Canada. We also compete in Mexico, Central America and South America through our joint ventures. We believe the markets we serve in the United States represent approximately $10.1 billion of annual revenue opportunity. In addition, we believe the increasing acceptance of thermoplastic pipe products in international markets represents an attractive growth opportunity.

We estimate that HDPE pipe and PP pipe represent approximately 25% of all domestic storm pipe sales, up from what we believe was less than 10% ten years ago, and less than 1% twenty years ago. Market penetration is expected to continue to grow significantly as the regulatory environment continues to change and as contractors, civil design engineers and municipal agencies fully recognize the superior physical attributes and compelling value proposition of HDPE and PP pipe. In part due to the efforts and success of our corporate and field civil engineers, an average of approximately 60 state, county and municipal approvals have been added or enhanced each year over the past five years, including 32 states over the past eight years.

Core Product Categories

Pipe Market

Demand for our products is largely driven by non-residential and residential construction, transportation and related water drainage infrastructure spending and the repair and replacement of aging stormwater management infrastructure. Freedonia estimates that demand for large diameter pipe (defined as 15” diameter or larger depending on industry standards by material type) in the United States will increase at an average of 6.2% per year from approximately 146 million feet in 2011, to 197 million feet in 2016, driven by the recovery of general economic and construction activity, as well as the need to repair and upgrade aging and obsolete sewer, drain and water distribution networks. We compete in the storm sewer, drainage, sanitary sewer and irrigation markets, which collectively represent approximately 70% of the overall large diameter pipe market in the United States.

LOGO

Source: Freedonia

According to Freedonia, demand for HDPE pipe is projected to grow at 7.0% annually through 2016, to 62.8 million feet due to the material’s competitive cost, light weight, resistance to corrosion, longer life and lower installed costs versus traditional materials such as concrete, steel and ductile iron. According to Freedonia, HDPE, the primary material in our products, is projected to become a larger portion of the overall large diameter pipe market as states and municipalities are expected to continue to adopt this product as a result of its superior attributes and approve its use in a broader range of applications.

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Since the introduction of PP pipe for use in the storm sewer market did not occur until 2012, the Freedonia growth projections referenced above do not take into account the potential impact that PP pipe may have in the larger diameter pipe market. Pipe manufactured from PP material has demonstrated improved stiffness and strength that allows for storm and sanitary sewer applications, which we believe will result in increased market share over concrete and PVC products. We further believe that our product line made from PP, in combination with our HDPE product line, provides us with a unique opportunity to grow market share in the large diameter pipe market.

According to Freedonia, sanitary and storm sewers, which represent approximately 50% of the total large diameter pipe market demand, are expected to continue to drive growth for the large diameter pipe market through 2016. Freedonia estimates that a large part of the growth will come from population increases in the South and West regions of the United States. EPA requirements and regulations are expected to continue to drive growth in the sanitary and storm sewer markets. Additionally, Freedonia estimates that the largest expected growth in the forecast period will come from the drainage market, as non-residential and residential construction continues to rebound.

LOGO

Source: Freedonia

In the United States, our market diversification positions us to take advantage of cyclical recovery in the non-residential and residential construction end markets, increased spending from the expected replacement of aging water drainage and sewer infrastructure, stricter EPA regulations for stormwater and wastewater management, and the need for increased crop production. According to the U.S. Department of Agriculture, demand for U.S. crops is expected to remain steady with a growing worldwide population and increased demand from developing nations. Steady global economic growth supports gains in worldwide food demand. Economic growth in developing countries is especially important because food consumption and feed use are responsive to income growth in these countries, with movement away from traditional staple foods to an increased diversification of diets.

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Positive end market trends in the non-residential construction, residential construction, agricultural and infrastructure markets are also expected to drive increased demand for pipe products in Canada. A growing population, increased economic development, and rising export demand for food are leading to further growth in the Canadian pipe market. In Mexico, Central America and South America, additional investments in modern storm and sanitary sewer systems are needed to support the economic growth and development occurring in those nations.

The construction sector is responsible for a majority of the pipe use and demand in Canada. According to Freedonia, HDPE pipe is expected to grow 6.5% annually through 2017 to 81,000 metric tons, the fastest growth of any plastic resin. Both non-residential and residential end markets will provide good opportunity for growth. Growth in fixed investment spending is expected to result in a higher number of sewer and drainage infrastructure projects. Housing starts in Canada are forecasted to grow from 185,000 in 2012 to 215,000 by 2017, according to Freedonia. A large industry around forestry, minerals, petroleum and natural gas also provides opportunity for pipe applications.

The GDP in Mexico is forecasted to expand at 3.7% annually through 2017. Construction demand accounted for 60% of the total pipe demand in Mexico in 2012. Freedonia forecasts HDPE pipe demand to grow 8% annually through 2017 to 50,000 metric tons, the fastest rate of any plastic resin. Construction growth in Mexico is driven by demand for housing, non-residential property development and additional investment in public infrastructure.

In South America, HDPE pipe demand is forecasted by Freedonia to increase 8.5% annually to 173,000 metric tons by 2017. Investment in sewer and drainage networks is associated with growth in the construction sector. The largest pipe markets in this geography are Brazil and Argentina.

Brazil is the largest country in South America in terms of population, area and economic output. Construction accounted for 75% of the total pipe demand in 2012 and is forecasted to stay near those levels through 2017. Freedonia forecasts HDPE pipe to grow 5.8% annually to 53,000 metric tons by 2017. HDPE is taking market share from PVC in drainage and sewer applications. Brazil has large infrastructure investment occurring related to the country hosting the 2014 FIFA World Cup and the 2016 Summer Olympics.

Argentina is the second largest pipe market in South America and Freedonia forecasts HDPE pipe demand to increase 8.4% annually to 24,000 metric tons by 2017. Primary end markets are construction, natural resources and agriculture. HDPE is expected to see wider use in drainage and sewer use due to its performance advantages compared to other competitive materials.

According to Freedonia, HDPE pipe is also expected to see solid growth in construction applications in other South American countries such as Colombia, Chile, Ecuador and Peru.

Related Water Management Solutions Market

Stormwater Retention/Detention

Current EPA regulations require any development of one acre or larger to retain stormwater on site and gradually release it over time. This is typically accomplished by holding the stormwater in a pond or in an underground system that allows the water to leach gradually into surrounding soil or be discharged at a regulated rate. Underground systems are an economical alternative to retention ponds as they maximize the use of the available land. Ponds also require more maintenance, use valuable land, and present inherent design, aesthetic and safety issues.

Growth in the stormwater retention/detention market is primarily driven by the continued recovery in the construction markets as well as current EPA regulations regulating the discharge of pollutants. According to the Freedonia Special Report, growth of retention/detention solutions is forecasted to grow 7.5% annually from 2013

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to 2016. Over this period, structural solutions such as pipe and plastic chambers are forecasted to grow 8.5%, while natural solutions such as ponds are forecasted to grow at a slower rate of 5.4%. Freedonia forecasts annual growth of 9.0% and 11.5% for plastic pipe and plastic chambers, respectively, from 2013 to 2016 as compared to other alternatives. This growth is due in part to plastic systems offering advantages from ease of installation, lower freight costs, space efficiencies and better corrosion resistance.

Our key product offerings in this market include our N-12 pipe, HP pipe and StormTech chambers. StormTech chambers are durable, chemically-resistant underground chambers that function as stormwater detention or retention systems. The chambers allow for the storage of large stormwater volumes at minimal depths and are primarily used in non-residential applications.

On-Site Septic

According to the EPA, an estimated 20% of total U.S. housing units depend upon on-site septic systems for the treatment and disposal of household sewage. Many of these systems consist of a septic tank and a soil absorption area where effluent is leached into the soil. A common component of all soil absorption lines and/or fields is a type of conduit that distributes the effluent throughout the soil, and the soil has the function of absorbing and treating effluent. The market is driven by new residential construction and, to a lesser extent, the repair and replacement of existing systems.

Structures

Drainage structures, such as manholes, catch basins and inlet structures, are used in all major storm projects in the non-residential, residential and infrastructure markets. Drainage structures move surface collected stormwater vertically down to the pipe conveyance systems. The predominant material used for structures today is concrete. The precast market is highly fragmented with a heavy concentration of local and regional competitors, due to the high freight costs incurred for transportation of the product.

Growth will be driven by the cyclical recovery in the construction markets. We compete in the structures market with our Nyloplast product line. Nyloplast products are an engineered drainage structure with a PVC body combined with ductile iron grates to create effective surface drainage solutions. Nyloplast structures are customized to site specific requirements and delivered ready to install. Limited field fabrication or other job site work such as concrete grouting or brick and mortar is required, which reduces construction cost and increases speed of installation compared to traditional precast concrete structures.

Water Quality

Due to the fact that stormwater runoff collects trash, oil, sediment and other pollutants, EPA regulations require development of one acre or larger to limit the level of sediment or other pollutants in discharged water. Water quality requirements are satisfied through the use of natural water quality systems, such as ponds and wetlands, or structural water quality systems, such as filters and separators. Each state in the United States has a preferred method of water treatment based primarily on environmental factors.

Similar to the retention/detention market, future growth and demand for water quality solutions is supported by increased construction activity, EPA regulations and increasing awareness of ecological issues of water quality. According to the Freedonia Special Report, water quality solutions are forecasted to grow 10.1% annually from 2013 to 2016. Both structural and natural solutions are anticipated to have similar growth rates. Within structural solutions, both separators and filters are forecasted to grow at an annual rate of 10.1%. Structural solutions are ideal for urbanized areas or where land is expensive or not available for natural solutions.

We compete in this market with our Water Quality Units and our BaySaver and FleXstorm products. We offer a water quality solution that fits a specific state’s requirements and assists owners, developers and design engineers in remaining compliant with the EPA regulations.

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Geosynthetics

The geosynthetics market consists of geotextile, geomembrane, georid and geonet products. Geosynthetics are used in a wide range of environmental and civil engineering applications to promote drainage, retain soils, control the flow of liquids and construct natural soil structures. Demand in this market is primarily driven by trends in nonbuilding and transportation construction activity. In 2012, approximately 60% of the geosynthetics area demand was in the infrastructure and construction markets. According to a study by Freedonia on world Geosynthetics demand (December 2013), U.S. geosynthetics demand is forecasted to grow 6.5% annually to 1.1 billion square meters by 2017, from 765 million square meters in 2012. We offer geotextile products by resale agreements with leading suppliers. We are able to combine our broad product offering with our sales and distribution network to bundle and deliver geotextile products in an efficient and cost effective way for our customers.

Core End Markets

Our end markets include the non-residential construction, residential construction, agricultural and infrastructure markets.

Total Non-Residential and Residential Construction (72% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our total net sales in the U.S. non-residential and residential construction markets were $674.5 million, which represented 72% of our domestic net sales. Our products are used in a diverse range of construction projects, including the construction of streets and highways, storm and sanitary sewer systems for non-residential, residential and industrial projects, golf courses, athletic fields and other construction projects where water management solutions are needed.

Combined non-residential and residential spending reached bottom in 2009 and began to slowly recover. Driven by a recovery in the residential construction market, the combination of these two end markets is forecasted to have a CAGR of 18% from 2012 to 2016, according to McGraw Hill.

Non-Residential Construction (51% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our net sales in the U.S. non-residential construction market were $480.1 million, which represented 51% of our domestic net sales. The main drivers of our products in the non-residential construction markets include the construction of commercial buildings and office parks, shopping centers and other large retail sites, healthcare facilities and hospitals, schools and education facilities and other institutional buildings. The Federal Clean Water Act and other EPA regulations impact the stormwater management and sewer construction markets of the non-residential sector.

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Reed Construction Data is forecasting U.S. non-residential construction, consisting of commercial, institutional, manufacturing and warehouse construction, to grow 6.6% annually from 2013 to 2016 and increase 8.2% in 2014 over 2013.

U.S. Non-Residential Building Construction Starts

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Source: Reed Construction Data

Additionally, the American Institute of Architects’ survey tracking billing activity for the industrial, residential, non-residential and institutional sectors indicates that the building construction markets continue to recover.

Architectural Billings Index Market Activity

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Source: American Institute of Architects

Note:

An ABI reading above 50 indicates an increase in month-to-month seasonally adjusted billings and a reading below 50 indicates a decrease in month-to-month seasonally adjusted billings.

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Residential Construction (21% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our net sales in the U.S. residential construction market were $194.4 million, which represented 21% of our domestic net sales. The main drivers of our products in the residential construction market include large community developments, single-family home construction, multi-family construction and home improvement spending through our various retail channels.

U.S. residential new construction has begun to recover since reaching historic lows during the recent economic downturn. According to the U.S. Census Bureau, new housing starts peaked in 2005 at approximately 2.1 million units, and subsequently declined to approximately 554,000 units in 2009. Housing starts began to recover in 2010, and strengthened to 925,000 in 2013, according to U.S. Census Bureau data. While new housing starts demonstrated an annual growth rate of 16% from 2010 to 2013, current levels remain substantially below the long-term average of 1.5 million starts since the U.S. Census Bureau began reporting the data in 1959. According to McGraw Hill, residential new housing is expected to increase to 1.11 million starts, or 14%, in 2014, and increase to 1.33 million starts, or 20%, in 2015.

As the housing market declined, homebuilders were left with excess inventory of improved lots with existing water drainage infrastructure already in place. From 2010 to 2012, as the housing market began to recover, new home sales and related construction activity occurred on those previously developed lots. As a result, we did not see an increase in sales in the residential real estate market during the early period of the housing recovery, since new home construction was occurring on parcels already developed. As this inventory of previously developed existing lots has been depleted, home builders are now looking for land acquisition and development of new housing construction, a trend which we believe will have a greater positive impact on our sales in this end market moving forward, as compared to sales that occurred during the beginning of the recovery of the housing market.

According to the American Housing Survey by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, more than 61% of the current U.S. housing stock was built before 1980 and the median estimated home age has increased from 23 years in 1985 to 37 years in 2011. We expect the home improvement market to continue to become a larger growth driver as housing markets continue to show growth and home equity values continue to increase. As of September 2013, the Home Improvement Research Institute projects that U.S. sales of repair, renovation and improvement products will grow at a rate of 5.4% in 2013, 6.8% in 2014 and 7.0% in 2015, driven by the improving economy, rising home prices and greater consumer confidence.


Total U.S. Housing Starts		Residential Repair, Renovation and Remodeling


Source: McGraw Hill		Source: HIRI / IHS Global Insight

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Agriculture (19% of Domestic Net Sales in Fiscal Year 2014)

For fiscal year 2014, our net sales in the U.S. agriculture market were $176.4 million, which represented 19% of our domestic net sales. Draining cropland improves root development, resulting in stronger crops, as well as allowing for earlier planting in the spring, thereby extending the growing season. Draining cropland also reduces soil erosion by moving water underground rather than allowing it to flow over the soil surface. We have maintained a strong presence in the agriculture market for decades, as local and corporate farmers continue to appreciate the value proposition and increased crop yield associated with the use of our pipe products. The Renewable Fuel Standard mandated by the EPA, as part of the Energy Independence and Security Act of 2007, establishes levels of renewable fuels that apply to gasoline or diesel produced or imported for use. The standard currently mandates approximately 15 billion gallons of ethanol used for gasoline or diesel use. The U.S. Department of Agriculture estimates that approximately 40% of corn production in the United States is consumed by ethanol production. With ethanol requirements not expected to decline, this combined with the needs of corn for human and livestock consumption, is anticipated to keep demand at strong levels for the foreseeable future.

According to a 1998 study published by The Ohio State University (in cooperation with several U.S. Department of Agriculture agencies and other Midwest land grant universities), improved harvesting technology, including the use of drainage pipe, can improve crop yields and therefore drive growth in the agriculture market. As compared to the previous five-year period from 2004 to 2008, U.S. agricultural exports increased by nearly $230 billion between 2009 and 2013. The past five years represent the strongest five-year period for agricultural exports in the history of the United States.

U.S. and global demand for corn and soybeans, net farm income and corn use for ethanol are significant drivers of our agriculture business and are leading indicators in regards to our product demand. According to the U.S. Department of Agriculture, agricultural exports were a record $140.9 billion in 2013 and are forecasted to increase 1% in 2014. The average yield of corn for grain production in the United States is estimated at 158.8 bushels per acre, up 35.4 bushels from the 2012 average yield of 123.4. Area harvested for grain is estimated at 87.7 million acres, up slightly from 2012. The average yield per acre of soybean production is estimated at 43.3 bushels, 3.5 bushels above last year’s yield. Harvested area is down slightly from 2012 to 75.9 million acres. Increases in production levels generate market demand for our products.

A rise in net farm income is a driving factor in growth in the drainage products industry. According to the U.S. Department of Agriculture, net farm income increased to $130.5 billion in 2013, up from $85.0 billion in 2008. The U.S. Department of Agriculture estimates that 40% of corn production in the United States is consumed by ethanol production, with requirements not expected to decline in the near future.

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The average value of cropland in the United States has risen from $1,750 per acre in 2004 to $4,000 in 2013, which in combination with the rise in net farm income leads to greater net worth for farmers. This makes drainage an attractive investment leading to higher land values for improved land, increased yields and lower cost for the farmer.

Average Cropland Value — United States

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Source: U.S. Department of Agriculture

Infrastructure (9% of Domestic Net Sales in Fiscal Year 2014)

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The aging infrastructure in the United States is expected to require repair or replacement in the coming years. The U.S. road network and sewer systems consist of approximately four million and 800,000 miles, respectively, of public road and highways and sewer mains that were primarily constructed over 50 years ago. The American Society of Civil Engineers, or ASCE, rated the overall U.S. infrastructure a grade of D+ in its recent 2013 report card, and estimates that $298 billion is needed over the next 20 years to replace and upgrade the existing wastewater infrastructure in the United States. ASCE’s primary concern is the need to address sanitary and combined sewer overflows. Citing the 2008 Clean Watersheds Needs Survey, the ASCE report states $64 billion is needed to address combined sewer overflows and stormwater management over the 20-year period (CSOs). At times of significant rainfall, the capacity of the CSO is exceeded, leading to a combination of storm and sanitary wastewater being discharged into streams and rivers. The ASCE report states that 32% of major roads are in poor or mediocre condition. The report also states that 42% of the urban highways remain congested, costing $101 billion in wasted time and fuel. There are four million miles of public roads and highways in the United States, primarily constructed over 50 years ago. The Federal Highway Administration estimates that $170 billion is needed annually to improve the condition of the nation’s roads and highways, a significant increase from the $101 billion that is needed to just maintain their current condition.

Street and Highway Spending

Sewer Spending

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Source: McGraw Hill

The recently enacted highway bill, “Moving Ahead for Progress in the 21st Century (MAP-21),” was signed into law in July 2012 and provides funding for federal transportation programs through the U.S. federal government’s fiscal year ending September 30, 2014 with annual funding levels approximating the levels in the U.S. federal government’s fiscal year ended September 30, 2012. Typically, federal funding for road construction represents 25-35% of a state’s transportation budget, but analysts believe that the federal program heavily impacts each State’s overall ability to plan and fund the majority of larger state/local road construction projects, which generally range in duration from one to five years. Most notable within MAP-21 is the “Transportation Infrastructure Finance and Innovation Act (TIFIA)” program’s expansion and simplification, which could potentially increase the overall reach of the federal construction budget by about 50%. The majority of Map-21’s direct budget authority is through regular highway grants, which provides states with funding of $37.5 billion in the U.S. federal government’s fiscal year ended September 30, 2013 and $37.8 billion in the U.S. federal government’s fiscal year ending September 30, 2014, essentially flat versus the U.S. federal government’s fiscal year ended September 30, 2012.

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BUSINESS

Company Overview

We have an extensive domestic network of 48 manufacturing plants and 19 distribution centers allowing us to effectively serve all major markets in the United States, which we define as the largest 100 metropolitan statistical areas based on population. The effective shipping radius for our pipe products is approximately 200 miles, thus competition in our industry tends to be on a regional and local basis with minimal competition from distant markets and imports. We are the only supplier of high performance thermoplastic corrugated pipe in our industry with a national footprint, thereby allowing us to efficiently service those customers that value having one source of supply throughout their entire distribution network. We believe our extensive national footprint creates a cost and service advantage versus our HDPE pipe producing competitors, the largest of which has only 10 domestic HDPE pipe manufacturing plants and, according to the December 23/30, 2013 ranking by Plastics News of Pipe, Profile & Tubing Extruders, recently had sales of $110 million, or approximately ten times less than our net sales in fiscal year 2014. Internationally, we have two manufacturing plants and three distribution centers in Canada, four manufacturing plants in Mexico, four manufacturing plants and five distribution centers in South America and one distribution center in Europe.

The majority of our sales are made through long-standing distribution relationships with many of the largest national and independent waterworks distributors, including Ferguson, HD Supply and WinWholesale, who sell primarily to the storm sewer and sanitary sewer markets. We also utilize a network of hundreds of small to medium-sized independent distributors across the United States. We have strong relationships with major

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national retailers that carry drainage products, including The Home Depot, Lowe’s, Ace Hardware, Menards and Do it Best, and also sell to buying groups and co-ops in the United States that serve the plumbing, hardware, irrigation and landscaping markets. The combination of our large sales force, long-standing retail and contractor customer relationships and extensive network of manufacturing and distribution facilities complements and strengthens our broad customer and market coverage.

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Segment Information

For a discussion of segment information, see Note 20, “Business Segments Information” to our audited consolidated financial statements included elsewhere in this prospectus.

Our Strengths

We believe that we benefit significantly from the following competitive strengths:

Market leader with unmatched scale

We are the leading manufacturer of high performance thermoplastic corrugated pipe and a leading manufacturer of related water management products. Our significant scale and market share position enable us to manufacture and distribute a broad range of high quality, attractively priced products. Our industry-leading manufacturing, engineering excellence, product innovation and world-class reputation are significant competitive advantages. We believe we have the largest sales force in the industry, with approximately 230 dedicated direct sales professionals that call on engineers, contractors and developers, allowing us to achieve direct access to

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numerous selling opportunities and end users. We believe our extensive national footprint of 48 manufacturing plants and 19 distribution centers creates a cost and service advantage versus our HDPE pipe producing competitors, the largest of which has only 10 domestic HDPE pipe manufacturing plants. We maintain an in-house fleet of approximately 625 tractor-trailers and approximately 1,100 trailers that are specially designed to haul our lightweight pipe and fittings products. Our effective shipping radius is approximately 200 miles from one of our manufacturing plants or distribution centers. Our world-class manufacturing expertise and extensive national distribution and fleet network allow us to service customers across the United States on a cost-effective and timely basis. Our long-standing customer relationships also provide us with visibility to attractive market opportunities.

Well positioned to drive continued material conversion

Our products are generally lighter, more durable, more cost effective and easier to install than comparable alternatives made with traditional materials. For example, concrete pipe generally weighs more than 20 times as much per foot as our thermoplastic pipe, resulting in the significant handling advantages that our product line enjoys during installation by contractors. These advantages typically provide our thermoplastic pipe with an installed cost advantage of approximately 20% over concrete pipe. High performance thermoplastic corrugated pipe represented approximately 25% of the total storm sewer market in 2012, up from what we believe was less than 10% ten years ago and less than 1% twenty years ago. We believe the penetration rate will continue to increase over time, as contractors, engineers and municipal agencies increasingly acknowledge the superior attributes and compelling value proposition of our thermoplastic products. We believe the recent introduction of our PP pipe products will also help accelerate this conversion given the additional applications for which our PP pipe products can be used. We continue to drive this material conversion through extensive sales force training and education of our customers. Our direct sales team is supported by approximately 50 field-based engineers who work closely with government agencies to obtain regulatory approval for our products, as well as with civil engineering firms influencing the specification of our products on construction projects. We have been at the forefront of educating an industry undergoing significant change in the regulatory environment, while pushing for expanded approvals of our products in new markets and geographies. Since 2006, 32 states have enhanced their approval of our pipe products, and an average of approximately 60 state, county and municipal approvals have been added or enhanced each year over the past five years.

Broad portfolio of Allied Products

We have a long history of leveraging our broad distribution platform to develop or acquire, and market, complementary Allied Products that provide new technologies and product capabilities, such as Nyloplast, StormTech, FleXstorm and Inserta Tee. Given our strong brand recognition, network of customer and distributor relationships and large team of trained salespeople, we believe we are the acquirer of choice for many providers of ancillary products who wish to partner with an industry leader. Our broad product line and reputation for quality provide our sales force with a competitive advantage in sourcing new opportunities and cross-selling products. Our broadly diversified product offering presents our customers with the ability to purchase a comprehensive water management solution from a single vendor. The breadth of our product offering allows distributors to minimize their number of transactions and keep order minimums low. Our ability to offer a diverse product suite is a key selling strategy and a driver of our growth and profitability.

Industry-leading manufacturing and technical expertise

We believe we have developed a reputation in the industry for products that deliver technically-superior performance with lower installation and maintenance costs versus competing products. Our products are: (i) lightweight and flexible — allowing for easy and low-cost installation and thereby significantly reducing the

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need for heavy equipment; (ii) strong — the corrugated profile design of our thermoplastic pipe products provides strength comparable to much heavier materials; (iii) resistant to corrosion — polyethylene and polypropylene are chemically inert materials; and (iv) resistant to abrasion — polyethylene and polypropylene have an excellent service life expectancy. We believe these characteristics provide our products with a competitive advantage over traditional products.

Our manufacturing process utilizes proprietary production equipment, designed by us in partnership with our equipment suppliers, that we believe is faster and more efficient than the equipment available to other companies. Our significant investment in custom-designed mold and die tooling ($173 million investment over the last nine years) allows us to manufacture a variety of corrugated pipe sizes and provides us with the flexibility to meet demand fluctuations in local regions. In addition, we rotate these setups across our network of manufacturing plants as needed to meet demand, which provides us with a unique competitive advantage. We believe that the footprint of our manufacturing plants, combined with our manufacturing technology and a low-cost production profile, provide a significant competitive advantage. The broad range of pipe sizes and custom products that we produce and maintain in finished goods inventory at numerous manufacturing plants and distribution centers provides our customers with a rapid delivery cycle, which is important to project contractors. We employ proprietary resin blending technology to minimize raw material cost and optimize production efficiency, while maintaining a consistent level of product performance. Utilizing this technology has allowed us to increase our ratio of recycled resin as a percent of total resin from approximately 24% in fiscal year 2005 to approximately 58% in fiscal year 2014, resulting in significant cost savings and reduced exposure to fluctuations in raw material costs.

Long-term customer relationships

We believe we have the largest and most experienced sales force in the industry, which allows us to maintain strong, long-standing relationships with key distributors, contractors and engineers. We also have sales agreements with many of the premier national distributor groups.

The combination of our technical expertise, product selection and customer delivery capabilities allows us to meet our customers’ critical installation schedules and positions us as a strategic partner. We strive to educate the regulatory and design community while offering the distributor and contractor network a comprehensive product suite. Our products are manufactured, assembled, delivered and serviced from a network of plants and yards that are strategically positioned in close proximity to most major domestic geographic markets.

We strive to be meaningfully involved in all phases of the project cycle, including design, bidding, award and installation. Many of our 230 sales professionals have technical or engineering backgrounds, which helps them educate design specialists on the benefits of our products. Our direct sales force is supported by approximately 50 field-based engineers who work closely with government agencies to obtain regulatory approval for our products and also help educate design engineers to encourage the specification and inclusion of our products into new projects. We consistently maintain thousands of touch-points with customers and regulatory authorities, continuously educating them on new product innovations, regulatory changes and the benefits of our products over traditional products. Our national scale combined with our local presence, dedication to service and broad product offering has enabled us to maintain our long-standing customer relationships.

Highly diversified across end markets, channels and geographies

We are strategically diversified across a broad range of end markets, distribution channels and geographies. We believe the markets we serve in the United States represent approximately $10.1 billion of annual revenue opportunity. Our products are used globally in a diverse range of end markets across non-residential construction, residential construction, agriculture and infrastructure. These end markets include storm sewer systems, agriculture, retail, stormwater retention/detention, on-site septic systems and structures. We maintain and service

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these end markets through strong product distribution relationships with many of the largest national and independent waterworks distributors, including Ferguson, HD Supply and WinWholesale, who sell primarily to the storm sewer and sanitary sewer markets. We also maintain relationships with a network of hundreds of small to medium-sized distributors across the United States. We also have strong relationships with major national retailers that carry drainage products, including The Home Depot, Lowe’s, Ace Hardware, Menards and Do it Best. We also sell through a broad variety of buying groups and co-ops in the United States. These groups are made up of related distribution members that leverage their collective buying power under a unified association. In addition to our large sales force and manufacturing footprint, our preferred vendor status with these groups allows us to reach thousands of locations in an effective manner. Organized buying groups include, but are not limited to, building products, waterworks, plumbing, landscaping, irrigation and hardware.

We serve our customers in all 50 U.S. states as well as approximately 90 other countries. Our domestic sales, which represented approximately 88% of our net sales in fiscal year 2014, are diversified across all regions of the United States. Approximately 12% of our net sales in fiscal year 2014 were generated outside of the United States. Our international growth strategy is focused on expanding our Canadian business and our joint ventures with best-in-class local partners in Mexico, Central America and South America. This joint venture strategy has provided us with local and regional access to markets such as Brazil, Chile, Argentina, Peru and Colombia.

Experienced management team with successful operating record and significant equity ownership

Our management team, led by our Chief Executive Officer, Joe Chlapaty, has an average of over 23 years of industry experience. We have a long history of generating profitable growth, attractive margins and cash flow. During periods of weaker economic conditions, we believe we have benefitted from an increased market focus on our products as a cost effective alternative to traditional materials. In stronger economic cycles, we have delivered profitable growth and an ability to leverage our scale and excess production capacity to meet rapid increases in demand. We believe we have managed our cost profile and profitability throughout economic cycles by driving continuous improvement initiatives in our manufacturing, distribution and service operations. Raw material costs are a significant portion of the cost of our pipe products, but we have been successful over time at passing through raw material cost increases to maintain our margins.

Our management and directors own approximately 20% of our capital stock on a fully-converted basis while our employees own an additional approximately 28% on a fully-converted basis through our employee stock ownership plan, or ESOP. After the completion of this offering, our management and directors will own approximately % of our common stock on a fully-converted basis. In addition, after the completion of this offering, the convertible preferred stock held by our ESOP will account for approximately % of our common stock on a fully-converted basis. This high level of management and employee ownership ensures that incentives are closely aligned with equity holders.

Our Business Strategy

Continue to drive conversion to our products

Our products are generally lighter, more durable, more cost effective and easier to install than comparable alternatives made with traditional materials such as concrete, steel and PVC. For example, concrete pipe generally weighs more than 20 times as much per foot as our thermoplastic pipe, resulting in the significant handling advantages that our product line enjoys during installation by contractors. These advantages typically provide our thermoplastic pipe with an installed cost advantage of approximately 20% over concrete pipe. We

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intend to continue to drive conversion to our products from traditional products as contractors, engineers and municipal agencies increasingly acknowledge the superior attributes and compelling value proposition of our thermoplastic products. Expanded regulatory approvals allow for their use in new markets and geographies, and we continue to invest heavily in industry education. We believe we are the industry leader in these efforts, particularly in promoting N-12 and SaniTite HP for storm and sanitary sewer systems, as regulatory approvals are essential to the specification and acceptance of these product lines.

The market conversion opportunities in Canada are similar to those in the United States except that the storm sewer market for HDPE and PP corrugated pipe is less developed. Recent approvals are accelerating the replacement of traditional materials. In Mexico, Central America and South America, sales opportunities to replace PVC pipe and concrete pipe in storm sewer, sanitary sewer, highway and electrical conduit markets continue to gain momentum as our sales force focuses on future market development.

Expand our product offering and markets served

We are able to successfully capitalize on our product development capabilities through our market presence, sales and distribution channels and customer relationships. Our ability to further develop our offering of Allied Products represents an attractive opportunity to capture additional growth and improve our overall margins. We have a dedicated team focused solely on selling Allied Products to our various end markets. We will continue to focus on enhancing our core products and expanding our Allied Products through cross-selling opportunities in order to further penetrate untapped markets and customers.

Our strong market position provides us with insight into the evolving needs of our customers, which has allowed us to proactively develop and deliver comprehensive water management solutions. The strength of our overall sales and distribution platform has allowed us to acquire new Allied Products and deliver solution-based product portfolios that typically result in significantly higher net sales post-acquisition than the products generated before the addition to our product portfolio.

We recently developed and introduced several innovative new products: SaniTite HP pipe for the storm sewer and sanitary sewer markets and StormTech Mega-Chamber products for the stormwater retention/detention market. These products are opening new avenues of growth for us and are providing access to new customers, selling opportunities and product conversion.

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SaniTite HP is a higher-performance polypropylene-based version of our popular N-12 product that is the result of more than three years and $3 million of R&D as well as $25 million of investments in production capacity. SaniTite HP offers us a large diameter (12” to 60”) storm and sanitary sewer product line to compete with PVC, concrete and steel pipe in the storm and sanitary sewer markets. Higher performance characteristics are driving sales growth through new and expanded regulatory approvals.

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Our StormTech Mega-Chamber stormwater retention/detention chambers are innovative new products that deliver increased underground storage with a compact product installation footprint, providing an attractive design option for engineers working on project sites where land is limited and/or expensive. These new chambers enable us to continue to accelerate our market share capture from large diameter corrugated metal pipe and pond-based retention/detention while accelerating the growth of Nyloplast basins, related water quality filters and pipe product sales.

We also expect to continue to enter into selective adjacent new markets that leverage our sales and engineering capabilities, customer relationships and national distribution network and provide more water management solutions to our customers.

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Expand our presence in attractive new geographies

Outside of the United States, we believe thermoplastic corrugated pipe represents a small part of the overall market. We further believe there is significant opportunity to convert new geographies based on the overall performance and value of our products, similar to what continues to occur in our existing markets. For example, in terms of opportunity for our products, the Canadian market is similar to the United States. The establishment of our facilities, sales and engineering teams in Canada strengthens our position and gives us a local presence in order to capitalize on these opportunities. To date, in order to increase our speed to market, we have expanded internationally primarily through joint ventures with best-in-class local partners. Our existing joint ventures provide us with access to markets such as Brazil, Chile, Argentina, Mexico, Peru and Colombia. Combining a local partner’s customer relationships, brand recognition and local management talent, with our world-class manufacturing and process expertise, broad product portfolio and innovation, creates a strong platform with additional opportunities for international expansion. Our South American Joint Venture recently opened a second manufacturing plant in northeast Brazil to better service our growing business in this portion of the country, as well as doubling our production capacity to make N-12 pipe.

The introduction of our products in Brazil, Chile and other South American countries offers additional growth opportunities in areas where there is an increasing focus on the positive impact of drainage for roads and non-residential and residential construction. In the future, we will continue to identify new geographies to access markets through joint venture relationships with domestic partners in targeted areas.

Capitalize on growth related to the recovery in our primary end markets

We believe we are well positioned to take advantage of renewed growth and recovery in the non-residential and residential construction and infrastructure markets in the United States. As it has in prior cycles, the recovery in non-residential construction has lagged residential recovery but began to improve modestly in 2012. According to the U.S. Census Bureau, the new residential construction market in the United States is in the midst of a recovery after declining to an historic low of 554,000 housing starts in 2009. In 2013, new housing starts were 966,000, and McGraw Hill projects growth of 14% in 2014, 20% in 2015 and 15% in 2016, when total housing starts are expected to reach their 50-year average of 1.5 million, when total housing starts are expected to reach their 50-year average of 1.5 million. Additionally, we believe we have the potential to capitalize on a substantial backlog of deferred infrastructure spending in the United States as a result of upgrades and repairs that were delayed in the recent economic downturn. Spending on the replacement of aging water drainage and sewer infrastructure (estimated to cost approximately $298 billion between 2013 and 2033, according to ASCE), and stricter U.S. Environmental Protection Agency, or EPA, guidelines for stormwater and wastewater management will drive additional demand for our products.

Continue our focus on operational excellence

Our focus on continuously improving operating efficiencies, reducing costs and improving product quality has enabled us to improve our position as a leading low-cost provider. We believe our lower production cost profile and a rapid customer delivery cycle serves as a significant competitive advantage.

We constantly strive to achieve operating and cost efficiencies across all facets of our business. For example, we employ sophisticated resin blending technology to minimize raw material costs and optimize production efficiency, while maintaining a high level of product quality and performance. We have implemented continuous improvement practices across all plants; and currently have three plant sites with comprehensive lean-six sigma-5S programs in early phases of implementation. We are already realizing benefits from these initiatives in many areas including product quality, productivity, safety, uptime and customer service.

Our production lines are built with transportable mold and die tooling, which provides us with the flexibility to maximize production capacity and leverage capital expenditures. We have a dedicated team of approximately 40 skilled tradesmen (tool and die machinists, fabricators, electricians) who build, service and maintain our molds and dies along with various plant equipment. This affords us high levels of uptime, equipment consistency

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and standardization and a low cost basis versus externally sourced machine shop services. We also have a specialized group of approximately 15 mechanical and industrial engineers who focus on optimizing efficiency, outfitting facilities and training employees and ensuring that we employ best practices across all of our locations.

Selectively pursue strategic acquisitions

By utilizing our customer relationships and sales force, we have a demonstrated ability to identify and integrate numerous strategic acquisitions. We believe our strong reputation for product growth, as well as our strong brand recognition, network of customer and distributor relationships and large team of trained salespeople, has allowed us to become the acquirer of choice, as demonstrated by our ability to identify new technologies and product capabilities and thereafter acquire such technologies and products. The acquisitions of strategic product lines such as BaySaver, FleXstorm, Nyloplast, Inserta Tee and StormTech have strengthened our market position while enhancing long-term growth and profitability and are examples of our ability to complete and integrate acquisition opportunities. These strategic additions have allowed us to expand our suite of water management products.

We have remained one of the strongest and best capitalized companies in the industry throughout the recent economic cycle and are well positioned to capitalize on current market dynamics to selectively acquire key products and technologies. We have strong industry relationships and maintain an active acquisition pipeline.

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Product Portfolio

We design, manufacture and market a complete line of high performance thermoplastic corrugated pipe and related water management products for use in a wide range of end markets. Our product line includes: single, double and triple wall corrugated polypropylene and polyethylene pipe, or Pipe, and a variety of Allied Products including: storm and septic chambers, or Chambers; PVC drainage structures, or Structures; fittings and filters, or Fittings; and water quality filters and separators, or Water Quality. We also sell various complementary products distributed through resale agreements, including geotextile soil stabilization products, or Other Resale.

An overview of our product offerings is provided below:


Product Offering	Description	Brands/Offerings	Images
Pipe (76% of Total Net Sales in Fiscal Year 2014)

	High density polyethylene and polypropylene pipe	Dual Wall Corrugated Pipe, HP Storm Pipe, SaniTite HP Pipe, Single Wall Corrugated Pipe, Triple Wall Corrugated Pipe, Smoothwall HDPE Pipe

Allied Products (24% of Total Net Sales in Fiscal Year 2014)

Chambers	Underground chambers made from polypropylene that can function as stormwater detention, retention, and/or “first flush” storage systems	StormTech, ARC (Septic Chambers), BioDiffuser (Septic Chambers)

Structures	Drainage structures consisting of inline drains, drain basins, curb inlet structures, and drop-in grates in diameters ranging from 8” to 30”	Nyloplast, Inserta Tee

Fittings	Standard and fabricated joining systems	Fittings

Water Quality	Water quality structures and filters	BaySeparator, BayFilter, Water Quality Units, FleXstorm

Other Resale	Complementary products providing services adjacent to core expertise	Geotextiles

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Pipe

Dual Wall Corrugated Pipe

Our N-12 is a dual wall HDPE pipe with a corrugated exterior for strength and a smooth interior wall for hydraulics and flow capacity. Our N-12 pipe competes in the storm sewer and drainage markets that are also served by concrete pipe.

Our N-12 pipe is available in 17 different diameters ranging from 2” to 60” and in sections ranging from 10’ to 30’ in length. N-12 provides joint integrity, with integral bell and spigot joints for fast push-together installation, and is also sold with watertight and soil-tight coupling and fitting systems.

Our corrugated polyethylene pipe offers many benefits including ease of installation, job-site handling and resistance to corrosion and abrasion. Corrugated pipe can easily be cut or coupled together, providing precise laying lengths while minimizing installation waste and difficulty.

HP Storm Pipe and SaniTite HP Pipe

Our HP Storm pipe utilizes polypropylene resin, which provides (i) increased pipe stiffness relative to HDPE; (ii) higher Environmental Stress Crack Resistance, or ESCR; and (iii) improved thermal properties, which improves joint performance. These improved physical characteristics result in a reduced need for select backfill, which creates installation savings for customers, and increase the effective service life of the product, which reduces the overall product cost and expands the range of possible product applications.

Our SaniTite HP pipe utilizes the same polypropylene resins as our HP Storm pipe but includes a smooth third exterior wall in 30” to 60” pipe. The highly engineered polypropylene resin along with the triple wall design enables SaniTite HP to surpass the 46 pounds per square inch, or psi, stiffness requirement for sanitary sewer applications. SaniTite HP offers cost and performance advantages relative to reinforced concrete pipe (such as improved hydraulics and better joint integrity) and PVC pipe (such as impact resistance).

Single Wall Corrugated Pipe

Our single-wall corrugated HDPE pipe is ideal for drainage projects where flexibility, light weight and low cost are important. Single wall HDPE pipe products have been used for decades in agricultural drainage, highway edge drains, septic systems and other construction applications. In the agricultural market, improved technology has highlighted the impact of drainage on crop yields. For homeowners, it is an economical and easily-installed solution for downspout run-offs, foundation drains, driveway culverts and general lawn drainage. Single wall pipe is also used for golf courses, parks and athletic fields to keep surfaces dry by channeling away excess underground moisture.

Standard single-wall products are available in 2” to 24” diameters and sold in varying lengths. Pipe with 2” to 6” diameters is typically sold in coils ranging from 25’ to 3,000’ in length, while larger diameter pipe is typically sold in 20’ lengths. Pipe can be either perforated or non-perforated depending on the particular drainage application.

Triple Wall Corrugated Pipe and Smoothwall HDPE Pipe

Our ADS-3000 Triple Wall pipe, small diameter triple wall corrugated pipe, consists of a corrugated polyethylene wall molded between a smooth white outer wall and a smooth black inner wall. This combination of the three wall design adds strength and stiffness, while reducing weight as compared to PVC 2729. Triple Wall is produced in two sizes, 3” and 4”, and sold through our distribution network.

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We also manufacture smoothwall HDPE pipe in 3”, 4”, and 6” diameters that are sold into the residential drainage and on-site septic systems markets.

Allied Products

We produce a range of additional water management products that are complementary to our pipe products. Our Allied Products offer adjacent technologies to our core pipe offering, presenting a complete drainage solution for our clients and customers. This combination of pipe and Allied Products is a key strategy in our sales growth, profitability and market share penetration. The practice of selling a drainage system is attractive for distributors and the end user, by providing a broad package of products that can be sold on individual projects, and strengthens our competitive advantage in the marketplace. We aggressively seek and evaluate new products, technologies and regulatory changes that impact our customers’ needs for Allied Products.

Using the strength of our overall sales and distribution platform, our Allied Product strategy allows us to more deeply penetrate our end markets and anticipate the evolving needs of our customers. The underground construction industry has historically been project (not product) driven, creating the impetus for owners, engineers and contractors to seek manufacturers that deliver solution-based product portfolios. Many of the components of underground construction are related and require linear compatibility of function, regulatory approval and technology.

Storm and Septic Chambers

Our StormTech chambers are used for stormwater retention, detention and “first flush” underground water storage systems on non-residential site development and public projects. These highly engineered chambers are injection molded from high density polyethylene and polypropylene resins into a proprietary design which provides strength, durability, and resistance to corrosion. The chambers allow for the efficient storage of stormwater volume at minimum depths, reducing the underground construction footprint and costs to the contractors, developers, and property owners. Our StormTech chambers offer great flexibility in design and layout of underground water storage system. They are an attractive alternative to open ponds by reducing ongoing maintenance and liability and providing more useable land for development. Stormwater runoff is collected and stored in rows of chambers and gradually reenters the water table through a gravel base, reducing erosion and protecting waterways. The chambers are open bottom, which allows for high density stacking in both storage and shipment. This freight-efficient feature drives favorable cost-competitiveness in serving long-distance export markets. These chamber systems typically incorporate our other product lines such as corrugated pipe, fabricated fittings, water quality units and geotextiles.

Our ARC and BioDiffuser products are chambers that are used in on-site septic systems for residential and small volume non-residential wastewater treatment and disposal. Rural homes and communities that do not have access to central sewer lines require an on-site septic solution. Our ARC and BioDiffuser chamber products are installed and perform their septic treatment function without gravel, reducing costs to the contractor and homeowner over traditional pipe and stone systems. States and municipalities have different sizing criteria for on-site septic treatment systems based on soil and site conditions. The innovative design of our ARC chamber is generally approved for a footprint reduction, further reducing the cost of the septic system. Injection-molded from high density polyethylene, these products are strong, durable, and chemical-resistant. These interconnecting chambers are favored by septic contractors because they are lightweight, easy to install and offer articulating features which increase site-specific design flexibility.

Structures

Our Nyloplast PVC drainage structures are used in non-residential, residential and municipal site development, road and highway construction, as well as landscaping, recreational, industrial and mechanical applications. The product family includes inline drains, drain basins, curb inlets and water control structures

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which move surface-collected stormwater vertically down to pipe conveyance systems. These custom structures are fabricated from sections of PVC pipe using a thermo-forming process to achieve exact site-specific hydraulic design requirements. Our Nyloplast products are a preferred alternative to heavier and larger concrete structures, by offering greater design flexibility and improved ease of installation which reduces overall project costs and timelines. The structures incorporate rubber gaskets to ensure watertight connections, preventing soil infiltration which plagues competitive products.

Our Inserta Tee product line consists of a PVC hub, rubber sleeve and stainless steel band. Inserta Tee is compression fit into the cored wall of a mainline pipe and can be used with all pipe material types and profiles. This product offers an easy tap-in to existing sanitary and storm sewers by limiting the excavation needed for installation compared to competitive materials.

Fittings

We produce fittings and couplings utilizing blow molding, injection molding and custom fabrication in addition to protective filters on our pipe products. Our innovative coupling and fitting products are highly complementary to our broader product suite, and include both soil-tight and water-tight capabilities across the full pipe diameter spectrum. Our fittings are sold in all end markets where we sell our current pipe products.

Water Quality

Our BaySaver product line targets the removal of sediment, debris, oils and suspended solids throughout a stormwater rain event by separating and/or filtering unwanted pollutants. Our BaySeparators can be fabricated into multiple sizing combinations to fit a variety of applications and customer requirements. These products assist owners, developers and design engineers in remaining compliant with discharge requirements set forth by the EPA as well as state and local regulatory agencies. Our BaySaver product line coupled with our pipe, StormTech chambers, fabricated fittings, Nyloplast structures, FleXstorm inlet protection systems and geotextiles make up a comprehensive stormwater management solution.

Construction Fabrics & Geotextiles

We purchase and distribute construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage. Constructed of woven and non-woven polypropylene, geotextile products provide permanent, cost-efficient site-development solutions. Construction fabrics and geotextiles have applications in all of our end markets.

Customers

We have a large, active customer base of over 17,000 customers, with no customer representing more than 10% of fiscal year 2014 net sales. Our customer base is diversified across the range of end markets that we serve.

A majority of our sales are made through distributors, including many of the largest national and independent waterworks distributors, with whom we have long-standing distribution relationships. These include Ferguson, HD Supply and WinWholesale, who sell primarily to the storm sewer and sanitary sewer markets. We also utilize a network of hundreds of small to medium-sized independent distributors across the United States. We have strong relationships with major national retailers that carry drainage products, including The Home Depot, Lowe’s, Ace Hardware, Menards and Do it Best. We offer the most complete line of HDPE products in the industry and are the only national manufacturer that can service the “Big-Box” retailers from coast-to-coast. We also sell to buying groups and co-ops in the United States that serve the plumbing, hardware, irrigation and landscaping markets. Selling to buying groups and co-ops provides us a further presence on a national, regional and local basis for the distribution of our products. Our preferred vendor status with these groups allows us to reach thousands of locations in an effective manner. Members of these groups and co-ops generally are

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independent businesses with strong relationships and brand recognition with smaller contractors and homeowners in their local markets. The combination of our large sales force, long-standing retail and contractor customer relationships and extensive network of manufacturing and distribution facilities complements and strengthens our broad customer and market coverage.

An important element of our growth strategy has been our focus on industry education efforts to drive regulatory approvals for our core HDPE products at national, state and local levels. We employ a team of approximately 50 field-based engineers who work closely with government agencies to obtain regulatory approvals for our products, and also with civil engineering firms to specify our products on non-residential construction and road-building projects. We consistently maintain an active dialogue with customers, civil engineers and municipal authorities, continuously educating them on new product innovations and their advantages relative to traditional products. With the introduction of our N-12 HP storm and sanitary pipe, we have refocused our efforts calling on state departments of transportation to enhance their approval of our pipe products. Additional state and local regulatory approvals will continue to present new growth opportunities in new and existing geographic markets for us.

For example, we have recently obtained approval for HP pipe use in several areas that had previously not approved our N-12 HDPE product — Colorado DOT, Missouri DOT, City of Atlanta, Metro St. Louis Sewer District, City of Indianapolis, Denver Metro Wastewater Reclamation District, and New York City Department of Buildings.

Our customer service organization of more than 100 employees is supplemented by the employees of our 58 manufacturing plants, 28 distribution centers and drivers of our approximately 625 tractor-trailers. In conjunction with our field sales and engineering team, this highly-trained and competent staff allows us to maintain more customer touch points and interaction than any of our competitors.

We staff and operate four regional customer service call centers located in three time zones where orders are processed. With some of our larger customers, we process orders electronically via electronic data interchange (EDI). Additionally, we send advance shipment notifications and invoices electronically to these customers. These capabilities strengthen the supply chain integration with large customers such as The Home Depot, Lowes, Ferguson and HD Supply. New orders are entered into our Oracle system, assigned to our closest manufacturing plant or distribution center in that geography, and then consolidated to optimize freight efficiency, payload and lead-time performance to meet customer requirements.

Sales and Marketing

We believe we have the largest and most experienced sales force in the industry, with approximately 230 dedicated direct sales professionals that call on engineers, contractors, distributors and developers. Offering the broadest product line in the industry enables our sales force to source the greatest number of new opportunities and more effectively cross-sell products than any of our competitors. We consistently maintain thousands of touch-points with customers, civil engineers and municipal authorities, continuously educating them on new product innovations and their advantages relative to traditional products. We believe we are the industry leader in these efforts and we view this work as an important part of our marketing strategy, particularly in promoting N-12 and SaniTite HP for storm and sanitary sewer systems, as regulatory approvals are essential to the specification and acceptance of these product lines.

Our sales and marketing strategy is divided into four components — comprehensive market coverage, diverse product offerings, readily-available local inventory and specification efforts. Our goal is to provide the distributor/owner with the most complete, readily-available product line in our industry. We strive to use our manufacturing footprint, product portfolio and market expertise to efficiently service our customers.

Our sales and engineering objective is to influence, track and quote all selling opportunities as early in the project life cycle as possible. Conceptual project visibility allows sales and engineering professionals the ability

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to influence design specifications and increase the probability of inclusion of our products in bid documents. We strive to be meaningfully involved in all phases of the project cycle, including design, bidding, award and installation. In addition to direct channel customers, we also maintain and develop relationships with federal agencies, municipal agencies, national standard regulators, private consulting engineers and architects. Our consistent interaction with these market participants enables us to continue our market penetration. This ongoing dialogue has positioned us as an industry resource for design guidance and product development and as a respected expert in water management solutions.

Seasonality

Historically, sales of our products have been higher in the first and second quarters of each fiscal year due to favorable weather and longer daylight conditions accelerating construction activity during these periods. Seasonal variations in operating results may also be impacted by inclement weather conditions, such as cold or wet weather, which can delay projects.

In the non-residential, residential and infrastructure markets in the northern United States and Canada, construction activity typically begins to increase in late March and is slower in December, January and February. In the southern and western United States, Mexico, Central America and South America, the construction markets are less seasonal. The agricultural drainage market is concentrated in the early spring just prior to planting and in the fall just after crops are harvested prior to freezing of the ground in winter.

Manufacturing and Distribution Platform

We have a leading domestic and international manufacturing and distribution infrastructure, serving customers in all 50 U.S. states as well as approximately 90 other countries through 58 manufacturing plants and 28 distribution centers including the facilities owned or leased by our joint ventures. We also operate an in-house fleet of 625 tractor-trailers. Our effective shipping radius is approximately 200 miles from one of our manufacturing plants or distribution centers. Our scale and extensive network of facilities provide a critical cost advantage versus our competitors, as we are able to more efficiently transport products to our customers and end users and to promote faster product shipments due to our proximity to the delivery location.

The combination of a dedicated fleet and team of company drivers allows greater flexibility and responsiveness in meeting dynamic customer jobsite delivery expectations. We strive to achieve less than three-day lead-time on deliveries, and have the added benefit of redeploying fleet and driver assets to respond to short-term regional spikes in sales activity. For deliveries that are outside an economic delivery radius of our truck fleet, common carrier deliveries are tendered using Nistevo, a customized software platform to ensure that lowest delivered freight costs are achieved. In addition, in the United States and Canada, more than 10% of our pipe volume is sold on a pick-up or walk-in basis at our plant and yard locations, further leveraging our footprint and lowering freight cost per pound and per revenue dollar.

Our North American truck fleet incorporates approximately 1,100 trailers that are specially designed to haul our lightweight pipe and fittings products. These designs maximize payload versus conventional over the road trailers and facilitate unassisted unloading of our products at the jobsites by our drivers. The scope of fleet operations also includes backhaul of purchased raw materials providing a lower delivered cost to our plant locations.

We have expanded internationally primarily through joint ventures with best-in-class local partners. This joint venture strategy has provided us with local and regional access to markets such as Brazil, Chile, Argentina, Mexico, Peru and Colombia. These international facilities produce pipe and related products to be sold in their respective regional markets. Combining a local partner’s customer relationships, brand recognition and local management talent, with our world-class manufacturing and process expertise, broad product portfolio and innovation, creates a powerful platform and exciting opportunities for continued international expansion.

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Manufacturing Process

We manufacture our corrugated pipe products in 17 different diameters ranging from 2” to 60” using a continuous extrusion process, where molten polyethylene or polypropylene is pushed through a die into a moving series of corrugated U-shaped molds. Blow air and vacuum are used to form the corrugations of the pipe which is pulled through a corrugator and then cut to length. We utilize customized and proprietary production equipment, which we believe is faster and more cost efficient than other pipe making equipment generally available in the market.

Domestically, we operate approximately 120 pipe production lines that collectively are capable of producing more than one billion pounds of pipe annually on a standard five-day day per week schedule. Significant unused capacity is in place to support growth in our N-12 pipe sales volume requiring minimal additional capital for molds. Our normal production capacity utilization as a percentage of total capacity was 63%, 65% and 64% for fiscal years 2012, 2013 and 2014, respectively. To produce our broad range of pipe sizes, we own and utilize approximately 250 mold and die setups, which had an original capital cost of approximately $130 million and most of which are moved between manufacturing plants. Our production equipment is built to accept transportable molds and die tooling over a certain range of sizes so each plant is not required to house the full range of tooling at any given time. This transportability provides us with the flexibility to optimize our capacity through centrally-coordinated production planning, which helps to adapt to shifting sales demand patterns while reducing the capital needed for tooling. With our large manufacturing footprint in place, we can support rapid seasonal growth in demand, focusing on customer service while minimizing transportation costs.

The standard fittings products (tees, wyes, elbows, etc.) that we produce and sell to connect our pipe on jobsites are blow molded or injection molded at four domestic plants. In addition, customized fabricated fittings (e.g., more complex dual wall pipe reducers, bends or structures) are produced in 17 of our North American plants. In addition to the extrusion of pipe, and blow molding and injection molding of fittings, we also use a variety of other processes in our manufacturing facilities. These processes include thermoforming, rotational molding, compression molding, and custom plastic welding and fabrication. The wide variety of production processes and expertise allow us to provide cost-effective finished goods at competitive prices delivered in a timely fashion to our customers.

Our manufacturing plants have no process related by-products released into the atmosphere, waterways, or solid waste discharge. During pipe production start-ups and size change-overs, non-compliant scrap and any damaged finished goods pipe are recycled through a grinder for internal re-use.

We have two internal quality control laboratory facilities equipped and staffed to evaluate and confirm incoming raw material and finished goods quality in addition to the quality testing that is done at our manufacturing facilities. We conduct annual safety, product and process quality audits at each of our facilities, using centralized internal resources in combination with external third-party services. In the quality area, various national agencies such as NTPEP, IAPMO, BNQ and CSA (Canada) and numerous state DOT and municipal authorities (e.g., Illinois, Michigan, Massachusetts, City of Columbus) conduct both scheduled and unscheduled inspections of our plants to verify product quality and compliance to applicable standards.

Core to our commitment and enablement of a safe and productive manufacturing environment are our operational and management training programs. Through our ADS Academy, we deliver targeted role-specific training to our operations team members through a blended curriculum of on-line and hands-on training experiences covering safety, quality, product knowledge and manufacturing process. Our learning management system, which hosts over 400 custom modules, serves as the foundation of our operational training programs and provides us with appropriate scale, efficiency, and governance to support our growth. We have a strong commitment to the training of our manufacturing supervisors and managers in technical, management, and leadership subjects through intense role-based assimilation plans, e-learning and classroom-based development experiences.

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Raw Materials

Virgin and recycled resins, which are derived either directly or indirectly from crude oil derivatives and natural gas liquids, are the principal raw materials utilized in our production process. We currently purchase in excess of 700 million pounds of virgin and recycled resin annually from over 450 suppliers in North America. As a high-volume buyer of resin, we are able to achieve economies of scale to negotiate favorable terms and pricing. Our purchasing strategies differ based on the material (virgin resin v. recycled material) ordered for delivery to our production locations. The price movements of the different materials also vary, resulting in the need to use a number of strategies to reduce volatility and successfully pass on cost increases to our customer through timely selling price increases when needed.

In 2008, as the price of crude oil reached unprecedented levels, we began to further augment our raw material blending and processing technologies to produce an HDPE pipe that incorporates recycled resin. This new product, which meets an American Society for Testing and Materials (ASTM) standard, replaces a majority of the virgin resin that is used in the American Association of State Highway and Transportation Officials (AASHTO) product with recycled materials. To further develop our recycled material strategies, we established Green Line Polymers, Inc., or GLP, as our wholly-owned recycling subsidiary in 2012. GLP procures and processes recycled raw materials that can be used in products we produce and sell. Our first production facilities were established in Ohio and Georgia and are focused on processing post-industrial HDPE recycled materials. Based on the success of this strategy, we expanded our efforts toward post-consumer material processing by acquiring the business of a vendor who was supplying clean, post-consumer recycled HDPE to our upper Midwest plants and established a second post-consumer processing plant, in Pennsylvania, to support our plants in Ohio, Michigan and the eastern and southern United States. In fiscal year 2014, 65% of our non-virgin HDPE raw material needs were internally processed (enhanced) through our GLP operations.

We believe that we are well positioned for future growth as we add additional recycled material processing facilities and expand our supplier base for virgin resin. With the significant increase in U.S. shale gas extraction expected to continue, along with related increases in natural gas production, we anticipate continued growth in the availability of ethylene and propylene and their polymer derivatives at competitive prices.

We have managed a resin price hedging program since early in 2010. Our program is designed to target a monthly volume of fixed price contracts that hedge a significant portion of our virgin resin purchases. In conjunction with our forward price hedging program, we also maintain supply agreements with our major resin suppliers that provide multi-year terms and volumes that are in excess of our projected consumption. In addition, we recently began implementing financial hedges for virgin PP resin to reduce the potential price volatility of that material, with a goal of hedging a significant portion of our annual purchases.

We began a diesel hedging program in 2008 which is executed through several financial swaps covering future months demand for diesel fuel and are designed to decrease our exposure to escalating fuel costs. These hedges cover a significant portion of the diesel fuel consumed by the truck fleet that we operate to deliver products to our customers.

Suppliers

We have developed relationships with all of the North American producers of virgin high density polyethylene and impact copolymer polypropylene producers that produce the grades we purchase for our new SaniTite HP product line and rapidly expanding StormTech retention/detention product line, including Braskem Americas, Chevron Phillips Chemical Co. LP, Dow Chemicals, Equistar Chemicals, ExxonMobil Chemical Company, Formosa Plastics, Ineos O&P USA and Phillips 66.

We also maintain relationships with several of the largest environmental companies such as Waste Management, Inc., Republic Services, Inc., Rumpke, Inc. and QRS, Inc., which provide us with post-consumer

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HDPE recycled materials. We also maintain relationships with several key post-industrial HDPE suppliers, including Dupont, Silgan Plastics, Consolidated Container Company and Alpla, which provide us with materials that cannot otherwise be utilized in their respective production processes.

The North American capacity for ethylene and polyethylene derivatives is being expanded primarily as a result of the new supplies of natural gas liquids being produced through shale gas exploration and production. This low-cost stream of feedstocks (ethane and propane) has positioned several companies such as Lyondell Basell, ExxonMobil, Chevron Phillips Chemical Co. LP and Dow Chemical to begin the permitting and engineering phases for significant amounts of ethylene and propylene feedstocks. We anticipate that the first wave of derivative capacity will begin coming on stream during 2015 and extending through 2018.

Competition

We operate in a highly fragmented industry and hold leading positions in multiple market sectors. Competition, including our competitors and specific competitive factors, varies for each market sector.

We believe the principal competitive factors for our market sectors include local selling coverage, product availability, breadth and cost of products, technical knowledge and expertise, customer and supplier relationships, reliability and accuracy of service, effective use of technology, delivery capabilities and timeliness, pricing of products, and the provision of credit. We believe that our competitive strengths and strategy allow us to compete effectively in our market sectors.

The stormwater drainage industry in particular is highly fragmented with many smaller specialty and regional competitors providing a variety of product technologies and solutions. We compete against concrete pipe, corrugated steel pipe and PVC pipe producers on a national, regional and local basis. In addition, there are several HDPE pipe producers in the United States.

In the United States, our primary competitors are concrete pipe producers, including Cemex, Hanson and Oldcastle CRH Precast, as well as smaller, regional competitors. In the corrugated steel pipe sector, our primary national competitor is Contech Engineered Solutions, and we compete with Lane Enterprises, Pacific Corrugated and Southeast Culvert on a regional level, as well as other smaller competitors. In the PVC pipe sector, we compete primarily with JM Eagle, Diamond Plastics and North American Pipe. We are the only corrugated HDPE pipe producer with a national footprint, and our competitors operate primarily on a regional and local level. In the corrugated HDPE pipe sector in the United States, our primary competitors on a regional basis are JM Eagle, Lane Enterprises and Prinsco.

The superior attributes of HDPE and PP and ongoing product innovation have allowed thermoplastic pipe manufacturers generally, and us in particular, to capture market share across all end market categories. This substitution trend is expected to continue as more states and municipalities recognize the benefits of HDPE and our N-12 HP PP pipe by approving it for use in a broader range of applications.

Properties

Real Property

We operate across all 50 U.S. states and 10 Canadian provinces through 72 locations in the United States and Canada, with 50 total manufacturing plants and 22 total distribution centers. We also have joint ventures that operate through 13 locations in Mexico, Central America and South America. We currently own approximately 36,000 square feet of office space in Hilliard, Ohio for our corporate headquarters.

As of March 31, 2014, we had a network of 58 plant locations, of which 39 were owned and 19 were leased. We generally prefer to own our locations, with a typical pipe manufacturing facility consisting of approximately

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40,000 square feet and 15-20 acres of land for storage of pipe and related products. We believe that our properties have been adequately maintained, are in good condition generally and are suitable and adequate for its business as presently conducted. The extent to which we use our properties varies by property and from time to time, but all distribution centers carry single wall and dual wall pipe and fittings and Allied Products per needs of the local market.

Our manufacturing plants and distribution centers, including those operated through our joint ventures, are shown in the map below.

LOGO

In-house Fleet

As of March 31, 2014, our in-house fleet consisted of approximately 625 tractor-trailers and approximately 1,100 trailers that are specially designed to haul our lightweight pipe and fittings products.

Intellectual Property

Intellectual property is an important aspect of our business. We rely upon a combination of patents, trademarks, trade names, licensing arrangements, trade secrets, know-how and proprietary technology in order to secure and protect our intellectual property rights, both in the United States and in foreign countries.

We seek to protect our new technologies with patents and trademarks and defend against patent infringement allegations. We hold a significant amount of intellectual property rights pertaining to product patents, process patents and trademarks. We continually seek to expand and improve our existing product offerings through product development and acquisitions. Although our intellectual property is important to our business operations and in the aggregate constitutes a valuable asset, we do not believe that any single patent, trademark or trade secret is critical to the success of our business as a whole. We cannot be certain that our patent applications will be issued or that any issued patents will provide us with any competitive advantages or will not be challenged by third parties.

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In addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information through the use of internal and external controls, including contractual protections with employees, distributors and others. Despite these protections, we may be unable to prevent third parties from using our intellectual property without our authorization, breaching any nondisclosure agreements with us, or independently developing products that are similar to ours, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States.

See “Risk Factors — Risks Relating to Our Business — If we are unable to protect our intellectual property rights, or we infringe on the intellectual property rights of others, our ability to compete could be negatively impacted.”

Information Technology

We recently completed a company-wide systems and software upgrade that was intended to serve as a scalable platform to support the next phase of our growth. This information technology project began in 2007 and was fully implemented in 2011. It has further enhanced our shared services strategy for all of our global operations. Our Oracle software platform has been configured to implement best practices across all of our business processes, and has greatly enhanced firm-wide integration, providing consistent internal system controls, data tracking, reporting and analytical capabilities. The capacity and flexibility of our systems allow us to support and enhance organic growth and profitability, as well as increase the ease of future acquisition integration. In addition, we developed an enterprise data warehouse system, downloading data from our Oracle software to provide timely reporting across our organization utilizing Microsoft SQL technology, which we use to more efficiently run our business.

Employees

In domestic and international operations, we averaged approximately 3,700 employees in the fiscal year ended March 31, 2014, consisting of approximately 2,500 hourly personnel and approximately 1,200 salaried employees. As of March 31, 2014, none of our hourly workforce was covered by collective bargaining agreements.

Regulation

Our operations are affected by various statutes, regulations and laws in the markets in which we operate, which historically have not had a material effect on our business. We are subject to various laws applicable to businesses generally, including laws affecting land usage, zoning, the environment, health and safety, transportation, labor and employment practices, competition, immigration and other matters. Additionally, building codes may affect the products our customers are allowed to use, and, consequently, changes in building codes may affect the saleability of our products. The transportation and disposal of many of our products are also subject to federal regulations. The DOT regulates our operations in domestic interstate commerce. We are subject to safety requirements governing interstate operations prescribed by the DOT. Vehicle dimensions and driver hours of service also remain subject to both federal and state regulation.

We have been able to consistently capitalize on changes in both local and federal regulatory statutes relating to storm and sanitary sewer construction, repair and replacement. Most noteworthy is the Federal Clean Water Act of 1972 and the subsequent EPA Phase I, II and sustainable infrastructure regulations relating to storm sewer construction, storm water quantity, storm water quality, and combined sewer separation. The diversity of products offering a solution based selling approach coupled with detailed market knowledge makes us an integral industry resource in both regulatory changes and compliance.

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Environmental, Health and Safety Matters

We are subject to a broad range of foreign, federal, state and local environmental, health and safety laws and regulations, including those pertaining to air emissions, water discharges, the handling, disposal and transport of solid and hazardous materials and wastes, the investigation and remediation of contamination and otherwise relating to health and safety and the protection of the environment and natural resources. As our operations, and those of many of the companies we have acquired, to a limited extent involve and have involved the handling, transport and distribution of materials that are, or could be classified as, toxic or hazardous, there is some risk of contamination and environmental damage inherent in our operations and the products we handle, transport and distribute. Our environmental, health and safety liabilities and obligations may result in significant capital expenditures and other costs, which could negatively impact our business, financial condition and results of operations. We may be fined or penalized by regulators for failing to comply with environmental, health and safety laws and regulations, or we may be held responsible for such failures by companies we have acquired. In addition, contamination resulting from our current or past operations, and those of many of the companies we have acquired, may trigger investigation or remediation obligations, which may have a material adverse effect on our business, financial condition and results of operations.

Legal Proceedings

We are involved in litigation from time to time in the ordinary course of business. In management’s opinion, none of the proceedings are material in relation to our consolidated operations, cash flows, or financial position, and we have adequate reserves to cover our estimated probable loss exposure.

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MANAGEMENT

The following table sets forth certain information concerning our executive officers and directors. The respective age of each individual in the table below is as of March 31, 2014.


Name	Age	Position(s)
Joseph A. Chlapaty	68	Chairman of the Board of Directors, Director, President and Chief Executive Officer
Mark B. Sturgeon	59	Executive Vice President, Chief Financial Officer, Secretary and Treasurer
Thomas M. Fussner	56	Executive Vice President and Co-Chief Operating Officer
Ronald R. Vitarelli	47	Executive Vice President and Co-Chief Operating Officer
Robert M. Klein	51	Executive Vice President, Sales
Ewout Leeuwenburg	47	Senior Vice President, International
Robert M. Eversole	51	Director
Alexander R. Fischer	46	Director
Tanya Fratto	53	Director
M.A. (Mark) Haney	59	Director
David L. Horing	51	Director
C. Robert Kidder	69	Director
Mark A. Lovett	32	Director
Richard A. Rosenthal	81	Director
Abigail S. Wexner	52	Director
Scott M. Wolff	36	Director*

Mr. Wolff intends to resign from our board of directors effective at the time of completion of this offering.

Joseph A. Chlapaty joined us in 1980 and has served as Chairman of our board of directors since 2008, a director since 1988, President since 1994 and Chief Executive Officer since 2004. From 1980 to 1994, Mr. Chlapaty served as our Vice President and Chief Financial Officer. Before joining us Mr. Chlapaty served as Corporate Accounting Manager, Assistant Treasurer, and Treasurer for Lindberg Corporation and prior to that was with Arthur Andersen LLP. Mr. Chlapaty serves on the advisory board to Fifth Third Bank of Columbus, and is also a member or former member of several not-for profit boards, including Nationwide Children’s Hospital, KIPP Journey Academy, Ohio Foundation of Independent Colleges, the University of Dubuque and Marietta College. Mr. Chlapaty holds a bachelor’s degree in Business Administration from the University of Dubuque and an MBA from DePaul University. We believe that Mr. Chlapaty’s leadership capabilities, his thorough knowledge of all facets of our business and operations and his deep understanding of our history, culture and the markets in which we operate make him qualified to serve as a member of our board of directors.

Mark B. Sturgeon joined us in March 1981 and has served as Executive Vice President and Chief Financial Officer since February 1994. Mr. Sturgeon has held the positions of Corporate Cost and Budget Manager and Market Planning Manager positions and was named Corporate Controller in October 1988. Prior to joining us he spent three years as a Budget & Financial Analyst for Borden Company and a year with Touche Ross & Company. Mr. Sturgeon holds both a bachelor’s and master’s degree in Accounting from Penn State University.

Thomas M. Fussner joined us in October 1989 and has served as Executive Vice President since February 2006 and Co-Chief Operating Officer since November 2009. Mr. Fussner joined us as Director, Supplier Relations and has held advancing leadership roles in our manufacturing and operations functions, including being named Vice President, Manufacturing Operations in July 1995 and Senior Vice President, Manufacturing Operations in January 2009. He currently oversees our manufacturing, logistics, procurement, manufacturing engineering, operational services, human resources, and information technology functions. Prior to joining us, he spent seven years at the lighting division of General Electric in plant, product, and customer service management positions. Mr. Fussner holds a bachelor’s degree in Chemistry from Colgate University and an M.B.A. with a concentration in Operations Management from the University of Michigan.

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Ronald R. Vitarelli joined us in November 1988 and has served as Executive Vice President & Co-Chief Operating Officer since November 2011. Mr. Vitarelli joined us as a Sales Representative and was promoted to Regional Sales Manager in December 1995. In July 2003, he was named General Manager of Stormtech LLC, a manufacturer of underground storm water retention and detention systems that was a 50/50 joint venture of ours with Infiltrator Systems, Inc. Upon our acquisition of the remaining 50% interest in Stormtech from Infiltrator in November 2009, Mr. Vitarelli rejoined us and continued to lead the Stormtech business until March 2010, when he was named Vice President, Storm & Sanitary Markets. He currently oversees our sales, product development, market management, and engineering functions. Mr. Vitarelli holds a bachelor’s degree in Marketing from Providence College.

Robert M. Klein joined us in June 1992 and has served as Executive Vice President, Sales since February 2006. Upon joining us, Mr. Klein held several leadership positions in operations including Manager, Regional Manufacturing, Manager, Distribution Yards, Director, Purchasing and was named Vice President, Manufacturing Services in January 2009. In July 2001, he was named Vice President, Sales and Marketing and began providing leadership to our field sales, corporate account sales, marketing, customer service, and market analysis functions. Prior to joining us he spent seven years at The Gerstenslager Company in manufacturing management positions. Mr. Klein holds a bachelor’s degree in Business Administration from Ashland College.

Ewout Leeuwenburg joined us in April 2001 and has served as Senior Vice President, International since November 2011. He began leading our international operations in December 2007 and was named Vice President, International in July 2008. Mr. Leeuwenburg joined us upon the completion of our acquisition of the Inline Drain & Drain Basin division of Nyloplast, USA in 2001. At the time of the acquisition, Mr. Leeuwenburg had been with Nyloplast, USA Inc. since July 1988 in various business development, operations, sales, and marketing manager positions, and had served as President, United States since July 1996. Upon joining us, he served as General Manager, Nyloplast and expanded his responsibilities to Director, Allied Products in September 2002. Mr. Leeuwenburg holds a bachelor’s degree in Mechanical Engineering from Hogeschool Rotterdam in the Netherlands.

Robert M. Eversole became a director in 2008. Mr. Eversole is a Principal of Stonehenge Partners, Inc., a private investment capital firm and has been continuously employed as such since 2007. Prior to joining Stonehenge Partners, Mr. Eversole spent 22 years with Fifth Third Bank, most recently as President and Chief Executive Officer of Central Ohio, and additionally served as Regional President for Fifth Third Bancorp affiliate banks in Western Ohio, Central Florida and Ohio Valley. He also served as a member of the Fifth Third Bancorp Operating Committee. Mr. Eversole currently serves on the boards of directors for certain privately-held companies and also serves on the boards of Nationwide Children’s Hospital Foundation, the Dean’s Advisory Council for The Ohio State University Fisher College of Business and the Catholic Foundation. Mr. Eversole is a graduate of The Ohio State University and has completed a number of executive education programs. We believe that Mr. Eversole’s extensive background in private equity and commercial banking, his expertise on financial matters and his extensive leadership and management experience make him qualified to serve as a member of our board of directors.

Alexander R. Fischer became a director in 2014. Mr. Fischer has been the President and CEO of the Columbus Partnership, an organization of CEOs focused on civic, philanthropic, education and economic development opportunities in Columbus, Ohio, since 2009. Prior to his role at the Columbus Partnership, Mr. Fischer worked at Battelle Memorial Institute, a science and technology company, from 2002-2009, where he served as Senior Vice President for Business and Economic Development, Vice President of Commercialization, and Director of Technology Transfer and Economic Development. Mr. Fischer has also worked in the public sector, as Commissioner of Economic Development, Deputy Governor and the Chief of Staff for the State of Tennessee from 1997 to 2002. In the past he has served on the boards of directors for a variety of for-profit and not-for profit organizations, and currently serves on the boards of N8 Medical, Nationwide Children’s Hospital, the Columbus Chamber of Commerce, Experience Columbus, Columbus 2020, Tech Columbus and The Ohio State Innovation Foundation. Mr. Fischer graduated from The University of Tennessee with a B.S. in Economics and Public Administration and also received a Master’s of Science in Urban

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Planning and Economic Development from The University of Tennessee. We believe that Mr. Fischer’s executive management experience, his knowledge of economic development and commercialization and the knowledge he has gained from his extensive involvement in the public policy sectors make him qualified to serve as a member of our board of directors.

Tanya Fratto became a director in 2013. Ms. Fratto spent 25 years with General Electric, prior to her retirement in 2011. From 2000 to 2011, Ms. Fratto served as President and CEO of General Electric’s Superabrasives division, a leading supplier of manufactured diamond, cubic boron nitride, and polycrystalline products. Her career at General Electric also included leadership roles in GE Plastics, Corporate Sourcing, GE Appliances and GE Consumer Services. She currently sits on the boards of Boart Longyear, a mining products and services company, and Smiths Global Plc, a global technology company. We believe that Ms. Fratto’s extensive executive and management experience as well as her experience managing global operations and the insights gained from those experiences make her qualified to serve as a member of our board of directors.

M.A. (Mark) Haney became a director in 2014. Mr. Haney retired in December 2011 from Chevron Phillips Chemical Company LP, a chemical producer, where he served as Executive Vice President of Olefins and Polyolefins from January 2011 until his retirement. From 2008 to 2011, Mr. Haney served as Senior Vice President, Specialties, Aromatics and Styrenics. He also served as Vice President of Polyethylene and President of Performance Pipe. Prior to joining Chevron, Mr. Haney served in numerous roles at Phillips Petroleum Company including business manager for Advanced Plastics, plant manager of Phillips Drislopipe and plant manager of the K-Resin plant, President of P66 Propane Company, Phillips Woods Cross business general manger, and President of Driscopipe. Mr. Haney currently serves on the board of directors of Phillips 66 Partners LP. Mr. Haney attended West Texas University and majored in chemistry. We believe that Mr. Haney’s extensive executive and management experience and his understanding of the petro-chemicals industry and the raw materials used in our products make him qualified to serve as a member of our board of directors.

David L. Horing became a director in 2010 and was appointed to our board of directors by ASP ADS Investco, LLC, an affiliate of American Securities. Mr. Horing is a Managing Director of American Securities, an investment firm, and is a Managing Member of the general partner of certain funds managed by American Securities. Before joining American Securities in 1995, he spent seven years at The Dyson-Kissner-Moran Corporation, a middle-market private equity investment firm and previously worked in Salomon Brothers’ Investment Banking division and with The Boston Consulting Group. He currently is a director of Liberty Tire Recycling Co., LLC, SpecialtyCare, Inc. and Tekni-Plex, Inc. Mr. Horing holds a bachelor’s degree in Engineering and a bachelor’s degree in Economics from the University of Pennsylvania and an M.B.A. from the Harvard Business School. We believe that Mr. Horing’s business education, extensive private equity experience, his industry and financial expertise and his years of experience providing strategic advisory services to complex organizations, as well as his understanding of American Securities, make him qualified to serve as a member of our board of directors.

C. Robert Kidder became a director in 2014. Mr. Kidder served as Chairman and Chief Executive Officer of 3Stone Advisors LLC, a private investment firm, from 2006 to 2011, and as non-executive Chairman of the Board of Chrysler Group LLC from 2009 to 2011. He was a Principal at Stonehenge Partners, Inc., a private investment firm, from 2004 to 2006. Mr. Kidder served as President of Borden Capital, Inc., a company that provided financial and strategic advice to the Borden family of companies, from 2001 to 2003. He was Chairman of the Board from 1995 to 2004 and Chief Executive Officer from 1995 to 2002 of Borden Chemical, Inc. (formerly Borden, Inc.), a forest products and industrial chemicals company. Mr. Kidder was Chairman and Chief Executive Officer and President and Chief Executive Officer of Duracell International Inc. Prior to joining Duracell International Inc. Mr. Kidder worked in planning and development at Dart Industries as well as a management consultant with McKinsey & Co. Mr. Kidder currently serves on the boards of directors of Merck & Co., Inc., Morgan Stanley, and Microvi Biotech Inc. He is also a director of Wildcat Discovery Technologies, Inc., a private technology research company. Mr. Kidder earned a B.S. in industrial engineering from the University of Michigan and a graduate degree in industrial economics from Iowa State University. We believe

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Mr. Kidder’s extensive financial and senior executive experience, including in business development, operations and strategic planning, as well as knowledge he has gained through his directorship service at other public companies, make him qualified to serve as a member of our board of directors.

Mark A. Lovett became a director in 2013 and was appointed to our board of directors by ASP ADS Investco, LLC, an affiliate of American Securities. Mr. Lovett is a Vice President at American Securities, focusing primarily on buyouts in the industrials and chemicals sectors. Since joining American Securities in 2007, Mr. Lovett has been actively involved in several of the firm’s portfolio companies and was a member of the transaction team that executed American Securities’ investments in each of MECS, Inc., Liberty Tire Recycling, LLC, and Tekni-Plex, Inc. Mr. Lovett previously worked at Liberty Tire Recycling and at UBS in the investment banking division. He holds a bachelor’s degree in Economics from Yale University and an M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Lovett currently serves on the board of directors of Tekni-Plex and Liberty Tire Recycling. We believe that Mr. Lovett’s extensive private equity experience, his industry and financial expertise and his years of experience providing strategic advisory services to complex organizations, as well as his understanding of American Securities, make him qualified to serve on our board of directors.

Richard A. Rosenthal became a director in 1988. Mr. Rosenthal retired from the University of Notre Dame in 1995 after successfully serving as Athletic Director for eight years. Prior to his service as athletic director and following a professional basketball career, Mr. Rosenthal held several leadership roles in banking, including as Executive Vice President of Indiana Bank & Trust as well as serving over 25 years as Chairman and CEO of St. Joseph Bancorp. He formerly served on the boards of directors of LaCrosse Footwear, St. Joseph Capital Bank, Beck Corp., and two advisory boards of venture capital funds. Mr. Rosenthal holds a bachelor’s degree in Finance from the University of Notre Dame. We believe that Mr. Rosenthal’s extensive financial and senior executive experience, as well as knowledge he has gained through his directorship service with other companies, make him qualified to serve as a member of our board of directors.

Abigail S. Wexner became a director in 2014. Mrs. Wexner is a member and former Chair of the boards of directors of Nationwide Children’s Hospital Inc. and Nationwide Children’s Hospital. She is Founder and Chair of the boards of the Center for Family Safety & Healing (f/k/a Columbus Coalition Against Family Violence) and KidsOhio.org, Vice Chair of the board of KIPP Journey Academy, and a Trustee of The Wexner Center Foundation and the United States Equestrian Team Foundation. Mrs. Wexner also serves as a director of L Brands (formerly Limited Brands, Inc.). Mrs. Wexner graduated from Columbia University and New York University School of Law. We believe Mrs. Wexner’s executive and legal experience, as well as her expertise with respect to a wide range of organizational, philanthropic and public policy issues make her qualified to serve as a member of our board of directors.

Scott M. Wolff became a director in 2010 and was appointed to our board of directors by ASP ADS Investco, LLC, an affiliate of American Securities. Mr. Wolff is a Managing Director of American Securities, an investment firm, and joined American Securities in 2002. Before joining American Securities, Mr. Wolff was with Merrill Lynch where he worked in the Mergers & Acquisitions Group, focusing on a variety of industries including consumer products, food, packaging, and automotive. He currently serves on the boards of directors of Arizona Chemical, SeaStar Solutions, HHI Group Holdings, GT Technologies, and Lakeside Energy. Mr. Wolff holds a bachelor’s degree in Finance from Indiana University and an MBA from the University of Pennsylvania, Wharton School. We believe Mr. Wolff’s extensive private equity experience, his industry and financial expertise and his years of experience providing strategic advisory services to complex organizations, as well as his understanding of American Securities, make him qualified to serve as a member of our board of directors. Mr. Wolff intends to resign from our board of directors effective at the time of completion of this offering.

Corporate Governance

Board Composition

Our business and affairs are managed under the direction of our board of directors. We currently have eleven directors. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal.

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Our board of directors is divided into three classes of directors serving staggered terms of three years each. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose term is then expiring. The terms of our current directors will expire upon the election and qualification of successor directors at the annual meeting of stockholders to be held during fiscal year 2015 for the Class I directors, fiscal year 2016 for the Class II directors and fiscal year 2017 for the Class III directors:

Our Class I directors are Joseph A. Chlapaty, Robert M. Eversole, Tanya Fratto and David L. Horing;

Our Class II directors are Alexander R. Fischer, M.A. (Mark) Haney and Scott M. Wolff; and

Our Class III directors are Abigail S. Wexner, Mark A. Lovett, Richard A. Rosenthal and C. Robert Kidder.

Effective at the time of completion of this offering, Mr. Wolff intends to resign from our board of directors. In order for the membership of the classes of our board of directors to remain as nearly equal in number as possible following the departure of Mr. Wolff, Mr. Lovett will be reassigned as a Class II director and will stand for re-election as a Class II director at the annual meeting of stockholders to be held during fiscal year 2016. Thereafter, the size of our board of directors will be reduced from eleven seats to ten seats to eliminate the vacancy created by the departure of Mr. Wolff.

Any vacancies in our classified board of directors will be filled by the remaining directors and the elected person will serve the remainder of the term of the class to which he or she is appointed. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy their oversight responsibilities effectively in light of our business and structure, our board of directors focused primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth immediately above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. We also value the experience that our directors bring from their service on other boards.

In connection with the investment in our common stock by ASP ADS Investco, LLC, an affiliate of American Securities, in 2010, certain of our stockholders, including ASP ADS Investco, LLC, entered into an amended and restated stockholders’ agreement that provides, among other things, that ASP ADS Investco, LLC is currently entitled to elect (or cause to be elected) four out of 11 of our directors. Currently, such directors include Messrs. Horing, Lovett and Wolff and Ms. Fratto. The stockholders’ agreement will be terminated contingent upon, and effective at the time of, consummation of this offering and it will be replaced by a registration rights agreement with certain of our stockholders, including ASP ADS Investco, LLC. See “Certain Relationships and Related-Party Transactions.”

Director Independence

Upon the completion of this offering, we intend to have our common stock listed on the NYSE. Under the rules of the NYSE, independent directors must comprise a majority of our board of directors within a specified period after the completion of this offering. In addition, the rules of the NYSE require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Under the rules of the NYSE, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

In order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, our board of

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directors, or any other board committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or (ii) be an affiliated person of the listed company or any of its subsidiaries.

In fiscal year 2014, our board of directors undertook a review of its composition, the composition of its committees, and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment, and affiliations, including family relationships, our board of directors has determined that none of our directors except for Mr. Chlapaty has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors, other than Mr. Chlapaty, is “independent” as that term is defined under the rules of the NYSE.

Except as otherwise described below, our board of directors has determined that those directors who serve on our audit committee, compensation and management development committee and nominating and governance committee satisfy the independence standards for those committees established by the rules of the NYSE and (in the case of the audit committee) the applicable SEC rules. In making this determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

Board Leadership Structure

Our board of directors does not have a formal policy on whether the roles of Chief Executive Officer and Chairman of our board of directors should be separate. The positions of the Chief Executive Officer and Chairman have historically been combined. Upon completion of this offering, Joseph A. Chlapaty will continue to serve as both Chief Executive Officer and Chairman. We believe that our stockholders are best served by having one person serve both positions. We further believe that combining the roles fosters accountability, effective decision-making and alignment between interests of our board of directors and management. Mr. Chlapaty also is able to use the in-depth focus and perspective gained in his executive function to assist our board of directors in addressing both internal and external issues affecting us.

Our board of directors recognizes that depending on future circumstances, other leadership models may become more appropriate. Accordingly, our board of directors will periodically review its leadership structure.

Board’s Role in Risk Oversight

The entire board of directors is engaged in risk management oversight. At the present time, our board of directors has not established a separate committee to facilitate its risk oversight responsibilities. Our board of directors expects to continue to monitor and assess whether such a committee would be appropriate. The audit committee assists our board of directors in its oversight of our risk management and the process established to identify, measure, monitor, and manage risks, in particular major financial risks. Our board of directors will receive regular reports from management, as well as from the audit committee, regarding relevant risks and the actions taken by management to address those risks.

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation and management development committee, a nominating and governance committee and an executive committee, each of which will have the composition and responsibilities described below. Our board of directors intends to adopt written charters for the committees that comply with current federal law and applicable NYSE rules relating to corporate governance matters, which will be available on our website upon completion of this offering. Our board of directors may also establish from time to time any other committees that it deems necessary or desirable.

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Audit committee

Our audit committee is comprised of Messrs. Eversole, Fischer, Haney, Lovett and Ms. Fratto, with Mr. Eversole serving as the chairperson of the audit committee. Our board of directors has determined that Mr. Lovett is not independent for the purposes of audit committee membership, due to his employment with American Securities. American Securities is a significant stockholder through its affiliate, ASP ADS Investco, LLC. Accordingly, solely for the purpose of Rule 10A-3 of the Securities Exchange Act of 1934, as amended, our board of directors has concluded that Mr. Lovett is an affiliated person by virtue of his relationship with American Securities and thus not considered independent for purposes of Exchange Act Rule 10A-3, although he is considered to be independent for purposes of the rules of the NYSE. All of the members of the audit committee are financially literate and have accounting or related financial management expertise within the meaning of the rules of the NYSE. Our board of directors has determined that Mr. Eversole qualifies as an “audit committee financial expert,” as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002.

Our audit committee will be responsible for, among other things:

•

reviewing and approving the selection of our independent auditors, and approving the audit and non-audit services to be performed by our independent auditors;

•

monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

•

reviewing the adequacy and effectiveness of our internal control policies and procedures;

•

discussing the scope and results of the audit with the independent auditors and reviewing with management and the independent auditors our interim and year-end operating results; and

•

preparing the audit committee report that the SEC requires in our annual proxy statement.

Compensation and management development committee

Our compensation and management development committee is comprised of Messrs. Kidder, Horing, Rosenthal and Ms. Wexner. Mr. Kidder is the chairperson of our compensation and management development committee. The compensation and management development committee will be responsible for, among other things:

•

overseeing our compensation policies, plans, and benefit programs;

•

reviewing and approving for our executive officers: the annual base salary, the annual incentive bonus, including the specific goals and amount, equity compensation, employment agreements, severance arrangements and change in control arrangements, and any other benefits, compensations or arrangements;

•

reviewing the succession planning for our executive officers;

•

preparing the compensation committee report that the SEC requires to be included in our annual proxy statement; and

•

administrating our equity compensation plans.

Nominating and corporate governance committee

Our nominating and corporate governance committee is comprised of Messrs. Kidder, Fischer, Wolff and Ms. Wexner. Ms. Wexner is the chairperson of our nominating and corporate governance committee. The nominating and corporate governance committee will be responsible for, among other things:

•

assisting our board of directors in identifying prospective director nominees and recommending nominees for each annual meeting of stockholders to our board of directors;

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•

reviewing developments in corporate governance practices and developing and recommending governance principles applicable to our board of directors;

•

overseeing the evaluation of our board of directors and management; and

•

recommending members for each board committee to our board of directors.

Executive committee

The executive committee is comprised of Messrs. Chlapaty, Horing and Rosenthal, meets between meetings of our board of directors, as needed, and has the power to exercise all the powers and authority of our board of directors with respect to matters delegated to the executive committee by our board of directors, except for the limitations under Section 141(c) of the Delaware General Corporation Law and/or applicable limitations under our organizational documents. Mr. Chlapaty is the chairperson of our executive committee.

Code of Conduct and Guidelines for Ethical Behavior

Prior to the completion of this offering, our board of directors will establish a Code of Ethics for Senior Executive and Financial Officers that applies to our senior executive and financial officers including our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions. A copy of the Code of Ethics for Senior Executive and Financial Officers will be available on our website at www.ads-pipe.com. We will promptly disclose any future amendments to this code on our website as well as any waivers from this code for executive officers and directors. Copies of this code will also be available in print from our Corporate Secretary, without charge, upon request. We also maintain a Standards of Ethical and Legal Conduct policy that governs all of our employees.

Compensation Committee Interlocks and Insider Participation

There are no interlocking relationships between any member of our compensation and management development committee and any of our executive officers that require disclosure under the applicable rules promulgated under the federal securities laws.

Director Compensation

From April 1, 2013 to February 27, 2014, non-employee director compensation reflected a combination of a $30,000 annual retainer and a $2,500 per meeting attendance fee for each board of directors meeting attended, paid on a quarterly basis. Members of the compensation and management development committee and audit committee also received a $2,500 per meeting attendance fee for each committee meeting attended.

In fiscal year 2014 we performed a review of the compensation structure and levels for non-employee directors in connection with the planning process for this offering and in connection with changes to the composition of our board of directors implemented prior to this offering. We engaged Towers Watson to assist in the review and development of recommended changes to non-employee director compensation structure and levels. Based on this review and the recommendations prepared by management, our board of directors modified its non-employee director compensation policy effective as of February 27, 2014.

Under the new policy, each non-employee director receives an annual cash retainer of $75,000. Each member of a committee of our board of directors receives an additional cash retainer as follows: $8,000 for a member of the audit committee, $6,000 for a member of the compensation and management development committee and $4,000 for a member of the nominating and governance committee (to be established prior to the completion of this offering). The chairman of each committee of our board of directors also receives an additional cash retainer as follows: $10,000 for the chairman of the audit committee, $8,000 for the chairman of the compensation and management development committee and $6,000 for the chairman of the nominating and governance committee. None of our directors receive meeting fees in addition to these retainers. The new cash

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compensation described above was prorated for the period beginning on February 27, 2014 and continuing through March 31, 2014.

The new non-employee director compensation policy further provides that upon completion of this offering and continuing each fiscal year thereafter until changed, each non-employee director who is not affiliated with American Securities will be granted restricted stock in an amount equal to $75,000 at the date of grant that will vest on the one year anniversary of the grant date (provided that the initial grant made to directors under the new compensation policy for fiscal year 2015 after completion of this offering will vest on February 27, 2015), subject to cancellation and forfeiture of unvested shares upon termination of service with our board of directors. Non-employee directors will also continue to receive reimbursement of all reasonable travel and other expenses for attending meetings of our board of directors or other Company-related functions. Non-employee directors who are affiliated with American Securities are awarded an annual fee of $150,000 in cash, along with fees for service on the various committees as described above, which fees are paid directly to American Securities and not to the director individually.

Fiscal Year 2014 Director Compensation

The following table summarizes the total compensation earned by each of our directors for the year ended March 31, 2014.


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		All Other Compensation ($)			Total ($)
Joseph A. Chlapaty ⁽¹⁾		—		—		—			—
Robert M. Eversole ^(2)(12)		60,500		—		—			60,500
David L. Horing ⁽³⁾		60,500		—		—			60,500
Tanya Fratto ⁽⁴⁾		60,000		—		45,833	⁽⁶⁾		105,833
David E. West ⁽⁴⁾⁽⁵⁾		48,000		—		—			48,000
William P. Sexton ^(5)(2)(12)		48,000		—		—			48,000
Scott M. Wolff ⁽⁷⁾		60,500		—		—			60,500
Richard A. Rosenthal ^(8)(12)		60,500		—		—			60,500
Fredric L. Smith ^(5)(9)(12)		40,500		—		—			40,500
Mark A. Lovett ⁽¹⁰⁾		58,000		—		—			58,000
Alexander R. Fischer ⁽¹¹⁾		12,500		—		—			12,500
M.A. (Mark) Haney ⁽¹¹⁾		12,500		—		—			12,500
C. Robert Kidder ⁽¹¹⁾		12,500		—		—			12,500
Abigail S. Wexner ⁽¹¹⁾		12,500		—		—			12,500

(1)	Mr. Chlapaty serves as our Chief Executive Officer and therefore receives no compensation for his service as a director.

(2)	Represents quarterly payments of annual retainer for membership on our board of directors, attendance fees for meetings of our board of directors and attendance fees for audit committee meetings.

(3)

Represents quarterly payments of annual retainer for membership on our board of directors, attendance fees for meetings of our board of directors and attendance fees for compensation and management development committee meetings. During fiscal year 2014, Mr. Horing served as a Managing Director at American Securities. Such fees are paid directly to American Securities and not to the director individually.

(4)	Represents quarterly payments of annual retainer for membership on our board of directors, attendance fees for meetings of our board of directors and attendance fees for compensation and management development committee meetings.

(5)	Resigned from our board of directors effective as of February 27, 2014.

(6)

Represents consulting fees paid pursuant to a consulting agreement entered into between us and Ms. Fratto on April 1, 2013, pursuant to which Ms. Fratto received $12,500 per calendar quarter for providing certain consulting services to us. Ms. Fratto’s consulting arrangement terminated on February 27, 2014.

(7)

Represents quarterly payments of annual retainer for membership on our board of directors, attendance fees for meetings of our board of directors and attendance fees for audit committee meetings. During fiscal year 2014, Mr. Wolff served as a Managing Director at American Securities. Such fees are paid directly to American Securities and not to the director individually.

(8)	Represents quarterly payments of annual retainer for membership on our board of directors, attendance fees for meetings of our board of directors and attendance fees for compensation and management development committee meetings.

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(9)	Represents quarterly payments of annual retainer for membership on our board of directors and attendance fees for meetings of our board of directors.

(10)

Represents quarterly payments of annual retainer for membership on our board of directors, attendance fees for meetings of our board of directors and attendance fees for audit committee meetings. During fiscal year 2014, Mr. Lovett served as a Vice President at American Securities. Such fees are paid directly to American Securities and not to the director individually.

(11)	Joined our board of directors effective as of February 27, 2014. Amounts represent fees earned for service on our board of directors under the new non-employee director compensation policy described above.

(12)

Each of Messrs. Eversole, Rosenthal, Sexton and Smith elected to receive shares of common stock in lieu of a portion of their respective cash compensation pursuant to the deferred fee program for non-employee directors described below. Each director elected to receive the following amounts of cash compensation in the form of common stock (i) Mr. Eversole: $32,500, (ii) Mr. Rosenthal: $50,000, (iii) Mr. Sexton: $35,000 and (iv) Mr. Smith: $50,000. The number of shares of common stock granted in lieu of cash compensation was based on the aggregate grant date fair value of our common stock computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. We calculated the estimated fair value of the shares of common stock issued in lieu of cash compensation on the date of grant as described above under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Employee Benefit Plans — Stock-Based Compensation Plans.” Each participating director agreed to pay cash to us if and to the extent that the grant date fair market value of the shares of common stock awarded exceeded the actual amount of fees otherwise payable to the director as compensation during the fiscal year, with such refund payment due and payable on the earlier of the end of the fiscal year or at the request of our board of directors.

Fiscal Year 2014 Deferred Fee Program for Non-Employee Directors

For fiscal year 2014, our board of directors established a program pursuant to which non-employee directors were permitted to receive a portion of director fees in the form of shares of common stock, up to a maximum of $50,000. In general, at the beginning of fiscal year 2014, each director was permitted to make an election to receive an amount of fees otherwise payable as cash during the fiscal year in the form of common stock, which shares of common stock were then awarded as of the beginning of the fiscal year based on the grant date fair market value. Each participating director agreed to pay cash to us if and to the extent that the grant date fair market value of the shares of common stock awarded exceeded the actual amount of fees otherwise payable to the director as compensation during the fiscal year, with such refund payment due and payable on the earlier of the end of the fiscal year or at the request of our board of directors. Four directors elected to receive a portion of director fees in the form of common stock as described in the fiscal year 2014 director compensation table above. We intend to adopt a non-employee incentive compensation program prior to the completion of this offering, pursuant to which non-employee directors may elect to receive a portion of their director fees in the form of shares of our common stock.

Non-Employee Director Stock Ownership Guidelines

To encourage equity ownership among non-employee directors, our board of directors intends to adopt stock ownership guidelines applicable to all non-employee directors other than those directors who are affiliated with American Securities that would become effective upon the completion of this offering. Under the stock ownership guidelines, each non-employee director who is not otherwise affiliated with American Securities, upon completion of this offering will be expected to own common stock having a value of at least three times their annual cash retainer. The non-employee directors will have five years from the later of the completion of this offering or the date of their election to fulfill this ownership requirement. The stock ownership guidelines will require each non-employee director to retain all shares received, net of shares sold for tax purposes, until the ownership requirements are met.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis provides information regarding the material elements of our fiscal year 2014 compensation program for our “named executive officers,” also referred to as the “NEOs.” Our NEOs for the fiscal year ended March 31, 2014 were:

•

Joseph A. Chlapaty, our President and Chief Executive Officer;

•

Mark B. Sturgeon, our Executive Vice President, Chief Financial Officer, Secretary and Treasurer;

•

Thomas M. Fussner, our Executive Vice President and Co-Chief Operating Officer;

•

Ronald R. Vitarelli, our Executive Vice President and Co-Chief Operating Officer; and

•

Robert M. Klein, our Executive Vice President of Sales.

The compensation and management development committee of our board of directors, or the Committee, pursuant to its charter, is responsible for establishing, implementing and reviewing on an annual basis our compensation programs and actual compensation paid to our NEOs, except for our Chief Executive Officer, with respect to whom the Committee’s decisions are subject to review and final approval by our board of directors.

Executive Summary

We believe our compensation practices and the overall level of executive compensation are competitive when compared to the marketplace and reflect our commitment to performance-based pay. Our compensation programs are intended to align our NEOs’ interests with those of our stockholders by rewarding performance that meets or exceeds the goals the Committee establishes, with the objective of increasing long-term stockholder value. Further, our executive compensation programs are intended to align with our financial performance.

At the beginning of fiscal year 2014 the Committee requested that management complete a review of our existing executive compensation programs as compared to market practice and in light of our current business model and growth strategy. While we have historically used a performance-based pay system for compensation, and have arm’s-length-negotiated employment agreements with each NEO, it was the view of the Committee that there were design elements in our cash-based incentive plan and long-term equity-based incentive plan that, if adjusted, could further align these plans with the interests of stockholders. Our human resources department, in consultation with our Chief Executive Officer and the Chair of the Committee, completed an assessment of all cash and equity compensation plans, including an analysis of the competitive market range for each executive position, and presented these findings, along with recommended changes, for the review and approval of the Committee in August of 2013. Recommended changes for the compensation plans of the Chief Executive Officer were also reviewed and approved by our board of directors in September of 2013 and implemented for the remainder of fiscal year 2014.

The executive compensation plans implemented in fiscal year 2014 are intended to serve as a multi-year framework, with the awards made in fiscal year 2014 intended to manage the transition to the new plans and their potential implications for total compensation of our executives, including our NEOs. Key changes in fiscal year 2014 to the components of compensation for our NEOs are as follows:

•

Base salary — Above-market annual base salary adjustments were provided effective September 1, 2013 based on an assessment of each NEO’s performance, position versus the competitive marketplace, and elapsed time since their last base salary adjustment.

•

Annual Cash Incentive Plan — Transitioned from a profit sharing pool-based incentive design to a plan design with explicit performance goals based on performance versus the prior year and corresponding awards (established as a percent of salary) for each NEO. Financial performance across two measures constitutes 80% of the target award with the remaining 20% allocated to individual performance, with

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the ability of the Committee to exercise discretion in establishing specific award determinations, as described below.

•

Long-Term Equity-Based Incentives — For the past several years, including in May 2013, the Committee recommended and our board of directors approved restricted stock grants to executives, including the NEOs which grants were made based on the aggregate grant date fair value of the restricted stock awarded. As part of the review of the executive compensation program in fiscal year 2014 the Committee determined that non-qualified stock option grants would better align the compensation of our NEOs with our long-term growth. Effective September 1, 2013 the Committee recommended and our board of directors approved non-qualified stock option grants to the NEOs, which are designed to be multi-year awards to encourage the retention and motivation of the executives through the transition to becoming a public company.

The changes implemented resulted in a shift of the total compensation mix of the NEOs from short to long-term compensation, which the Committee believes further aligns the interests of our executives with those of our stockholders.

Our Compensation Philosophy and Principles

Our culture is based on delivering sustainable results; a philosophy we believe is best embodied by our core values of:

•

focusing on long-term growth and profitability;

•

creating an environment that promotes loyalty among employees, customers, and suppliers;

•

being sales and marketing driven;

•

being committed to innovation in product, process, and technology; and

•

ensuring quality throughout our products and organization.

Compensation Philosophy

The Committee and our management believe that fostering the core values referenced above requires a strong performance culture and compensation programs that align our executives’ interests with those of all of our stockholders by rewarding performance that meets or exceeds the goals established by the Committee and our board of directors.

Compensation Principles

Our executive compensation programs are designed according to the following principles:

•

emphasizing pay-for-performance to motivate both short and long-term performance;

•

placing greater emphasis on variable pay versus fixed pay;

•

linking the total compensation of our executives to the sustained value they create for our stockholders through the use of equity-based compensation;

•

structuring total compensation levels within competitive range for similar executive roles; and

•

attracting, retaining and motivating top executive talent.

Determining Executive Compensation

Role of our Compensation and Management Development Committee . Pursuant to authority delegated by our board of directors, the Committee is responsible for the design and implementation of our executive compensation policies and programs and determines the compensation for each of our executive officers other

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than the Chief Executive Officer consistent with the terms of the employment agreement for each NEO. In fiscal year 2014, our board of directors determined the compensation of Mr. Chlapaty, our Chief Executive Officer, based on the Committee’s recommendations and in accordance with Mr. Chlapaty’s employment agreement. A summary of the employment agreements currently in effect with each of our NEOs is described below under “— Employment Agreements.”

Role of Management. Our human resources department, in partnership with the Committee, supports the design and implementation of all executive compensation programs. Our finance department supports this process by providing financial analysis and input as part of the review of program design. Except with respect to his own compensation, our Chief Executive Officer has final management-level review of any compensation program before it is sent to the Committee for consideration and approval. The Committee has responsibility for approving our material compensation programs, including our equity compensation program. Management frequently consults with the Committee during the design process to obtain their direction and feedback on how the design of our executive compensation programs supports our overall strategy.

Use of Comparator Data . For consideration in the review and approval of the fiscal year 2014 executive compensation programs, neither we nor the Committee retained the services of any third-party compensation consultants to benchmark our compensation policies against a targeted peer group of companies. Instead, the Chief Executive Officer and the Committee utilized a market analysis prepared by the human resources department to provide an understanding of the competitive market for use in the development, review, and approval of the fiscal year 2014 executive compensation programs.

To provide competitive market range information for fiscal year 2014, a market analysis was performed based on ownership, industry, and revenue, as most recently taken from the 2012 Mercer Executive Compensation Survey (2,541 organizations participating) and the 2012 Towers Watson Executive Compensation Survey (534 organizations participating). The market segmentation used for base salary and short-term incentive comparisons was private companies of all industries and revenue between $500 million and $1.5 billion. The market segmentation used for long-term compensation comparison was public and private companies of all industries and revenue between $500 million and $1.5 billion. To establish market ranges, data from the two surveys were averaged together and a low and high range established from the calculated median data. For base salary and short-term incentives, a plus or minus factor of 20% was applied to establish the low and high market ranges and for long-term compensation a plus or minus factor of 25% factor was applied to establish the low and high market ranges.

Role of Compensation Consultants. While the Committee did not engage the services of a compensation consultant in connection with the revisions made to our incentive programs in fiscal year 2014, in January 2014, our vice president of human resources, at the direction of the Chief Executive Officer, engaged Towers Watson, a third-party executive compensation consultant, to assist management in connection with a further review of our existing and proposed director and executive officer compensation programs, in anticipation of this offering. Towers Watson also assisted management with respect to the review of this prospectus and the disclosures related to executive compensation. Towers Watson did not provide any services to us, or receive any payments from us, other than in their capacity as a consultant to our management for the limited purposes described above.

Setting Pay Levels

When setting pay levels the Committee exercises its discretion to position individual pay levels higher or lower in the competitive market range based on a subjective assessment of individual facts and circumstances, including:

•

the strategic importance of the position to our growth objectives;

•

the individual experience, competency, skill, performance, and potential;

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•

the overall performance and contribution of the individual to the business performance; and

•

the elapsed time since the last compensation adjustment.

Components of Compensation

For fiscal year 2014, the principal components of compensation for the named executive officers were:

•

base salary;

•

annual cash incentive compensation;

•

long-term equity-based compensation; and

•

benefits and executive perquisites.

The Committee has responsibility for determining all elements of compensation granted to the NEOs and reviews each element of compensation, as well as the relative mix or weighting of elements, on an annual basis.

Base Salary

Base salary is the primary fixed element of total compensation and serves as the foundation for the executive’s compensation structure, since the annual cash incentive program is directly linked to base salary levels. Our NEOs are covered by employment agreements and, accordingly, we pay annual base salaries initially as set forth in these agreements as thereby adjusted, which are determined based on each NEOs position and responsibility and on available market data. Base salaries for each NEO are reviewed on an annual basis and compared against the competitive range for similar positions based on survey data provided by our human resources department. Each year, the Chief Executive Officer, with input from the human resources department, proposes base salary increases, if any, for all NEOs, excluding himself, based on the aforementioned criteria. His proposal is subject to review and approval (with or without modifications) by the Committee. Changes to Mr. Chlapaty’s base salary are initiated and approved by the Committee directly, subject to the review and final approval of our board of directors.

As part of our overall review of our executive compensation programs, the Committee recommended an increase in the fiscal year 2014 base salary for our Chief Executive Officer, following its review of Mr. Chlapaty’s performance, the compensation information from the comparison survey data referenced above and the elapsed time since his last base salary adjustment, which was May 2010. For all the other NEOs, the Committee increased 2014 salary levels taking into account the recommendations from the Chief Executive Officer, the performance of each NEO, the compensation information from the comparison survey data referenced above and the elapsed time since the last base salary adjustment for each NEO. For Mr. Sturgeon, Mr. Fussner, and Mr. Klein their last base salary adjustment was May of 2010. Mr. Vitarelli’s last salary adjustment was in November of 2011 as part of his promotion to Executive Vice President and Co-Chief Operating Officer.

The table below shows the adjustments in base salary for the NEOs in fiscal year 2014. Base salary adjustments were effective as of September 1, 2013 with no adjustments or annualization for amounts paid prior to the adjustment date for fiscal year 2014.


Named Executive Officer	Base Salary As of August 31, 2013($)		Base Salary After Adjustment($)		Change
Joseph A. Chlapaty		425,000		475,000		12	%
Mark B. Sturgeon		250,000		285,000		14	%
Thomas M. Fussner		300,000		315,000		5	%
Ronald R. Vitarelli		250,000		275,000		10	%
Robert M. Klein		250,000		270,000		8	%

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Annual Cash Incentive Compensation

Prior to fiscal year 2014, the executive annual cash incentive plan functioned as a profit-sharing pool in which a designated percentage of our annual operating earnings were allocated to an incentive pool. Our Chief Executive Officer, subject to the approval of our board of directors, received a pre-established percentage of the allocated incentive pool. For all other executives, including all NEOs except himself, the CEO would recommend a distribution for the review and approval of the Committee from the incentive pool for each executive based on the assessment of the executive’s individual performance and contribution to our overall annual performance. As part of the assessment discussed above under “— Executive Summary,” the design of this program was evaluated and changes to the design were recommended and approved by the Committee and our board of directors for fiscal year 2014.

The fiscal year 2014 ADS Cash Incentive Plan, or the Cash Incentive Plan, provides annual cash incentive compensation opportunities based on two performance measures related to our financial performance, as well as an individual performance measure based upon the performance of the NEO as compared to their annual performance objectives. By tying a significant portion of the executive’s total annual cash compensation to annual variable pay, the Committee believes it further reinforces our pay for performance culture and focuses our executives on critical short-term financial and operational objectives, which also support our long-term financial goals.

Establishing Target Payouts

Under the Cash Incentive Plan, target payouts for each NEO are reviewed on an annual basis and compared against the competitive range for similar positions based on survey data provided by the human resources department. The Chief Executive Officer, with input from the human resources department, proposes annual target payout adjustments, if any, for all NEOs, excluding himself, based on the aforementioned performance measures. His proposal is subject to review and approval (with or without modifications) by the Committee. Changes to Mr. Chlapaty’s targeted payout from the Cash Incentive Plan are initiated and approved by the Committee directly, subject to the review and final approval of our board of directors.

Consistent with our compensation principles, the target payouts from the Cash Incentive Program are a significant portion of the target annual cash compensation for our NEOs. In general, the annual target percentages for each of the NEOs is high in the competitive range as compared to the survey data. The Committee believes the established targets enhance the alignment to our pay-for-performance and stakeholder alignment principles. The target annual cash incentive payouts for 2014 as a percentage of salary were as follows:


	Target Payout (as a percent of salary)
Joseph A. Chlapaty		140	%
Mark B. Sturgeon		75	%
Thomas M. Fussner		75	%
Ronald R. Vitarelli		75	%
Robert M. Klein		65	%

Use of Discretion

In making award determinations under the Cash Incentive Plan, the Committee also has the authority and discretion to take into consideration the impact of other factors or events that affected our business during the year and adjust any payout awards accordingly. As described below, the Committee exercised discretion in making award determinations for fiscal year 2014.

Performance Measures

The Committee believes that the following measures reflect key value drivers for purposes of establishing payouts under the Cash Incentive Plan:

•

Adjusted EBITDA — EBITDA before stock based compensation expense, non-cash charges and certain other expenses.

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•

Average Debt Balance — trailing twelve month average long-term debt.

•

Individual Goal Achievement — performance of the executives versus their annual performance objectives.

Minimum, target, and maximum performance thresholds are established based on the Committee’s assessment of performance targets that appropriately drive and reward the achievement of growth versus our prior year performance levels.

For fiscal year 2014, 70% of the incentive award is based upon the achievement of certain levels of Adjusted EBITDA, 10% is based upon certain levels of average debt balance, while 20% is based upon attainment of certain personal performance goals. The foregoing percentages are then multiplied by the NEO’s target percentage of base annual salary as of September 1, 2013 to arrive at the target amounts.

Consistent with our pay-for-performance compensation principle, the Cash Incentive Plan includes a funding trigger that requires the achievement of the established threshold performance level for Adjusted EBITDA in order for any potential payout based on the Average Debt Balance or Individual Goal Achievement measures. For fiscal year 2014 the Adjusted EBITDA funding trigger was set at $130,524,000, the minimum Adjusted EBITDA threshold required to receive a threshold payout of 50% as described below.

The minimum performance goals required to achieve a threshold payout of 50% of target for Adjusted EBITDA and average debt balance were $130,524,000 and $380,846,000, respectively, and reflect our prior year actual performance levels. For fiscal year 2014, the Committee approved the establishment of a target range for the financial measures in the Plan, for which performance within the range earns a 100% payout. The bottom of the target range for the Adjusted EBITDA performance measure represents 15% or $19,476,000 growth versus prior year and the top of the target range represents a 26% or $33,532,000 growth versus prior year. The bottom of the target range for the average debt balance represents a 5% or $20,822,000 reduction versus the prior year and the top of the target range represents a 10% or $37,966,000 reduction versus the prior year. The maximum performance goals required to achieve a threshold payout of 200% of target for Adjusted EBITDA and average debt balance reflect 51% or $66,343,000 growth and 19% or $72,147,223 reduction versus prior year, respectively. Payout percentages for performance between the minimum performance goal and bottom of the target range as well as from the top of the target range to the maximum performance goal are determined using linear interpolation.

The Cash Incentive Plan also includes an individual goal achievement measure to provide the Chief Executive Officer, the Committee, and our board of directors the opportunity to distinguish individual performance. For each NEO, at the beginning of the fiscal year the Committee approved individual annual performance objectives supportive of key business and operational strategies. The individual objectives were based on objective and subjective criteria. Payments based upon this measure in the Cash Incentive Plan are recommended by the Chief Executive Officer, excluding himself, based on his assessment of the performance of the NEOs versus the established annual performance objectives approved for the fiscal year. The recommendations are subject to the review and final approval of the Committee. Similarly, the Committee assesses the performance of the Chief Executive Officer versus his established annual performance objectives and recommends a payout percentage for the measure that is subject to the review and final approval of our board of directors.

The annual performance objectives for Mr. Chlapaty for fiscal year 2014 included (i) increasing revenue and Adjusted EBITDA levels, (ii) accelerating development of senior level succession plan, (iii) preparing a comprehensive strategy for a potential public offering, (iv) completing the sale of nonstrategic assets, (v) managing any outstanding company litigation, (vi) driving enhanced financial accountability and (vii) executing strategies to pay down long-term debt.

The annual performance objectives for Mr. Sturgeon for fiscal year 2014 included (i) executing strategies to pay down long-term debt, (ii) improving operational analysis and accountability, (iii) securing new credit facilities, (iv) preparing a comprehensive strategy for a potential public offering, (v) supporting reduction in production costs and (vi) building leadership and talent in finance organization.

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The annual performance objectives for Mr. Fussner for fiscal year 2014 included (i) driving performance achievement and freight program cost savings, (ii) resolving operational issues, (iv) leading turnaround of concrete operations and (v) building leadership and talent in operations organization.

The annual performance objectives for Mr. Vitarelli for fiscal year 2014 included (i) driving implementation of strategies to grow core storm drainage market, (ii) driving implementation of strategies to grow in sanitary and Stormtech markets, (iii) leading geographic planning meetings including sales and manufacturing teams, (iv) developing new storm products, (v) decreasing warranty claims and (vi) building leadership and talent in sales and technical services organization.

The annual performance objectives for Mr. Klein for fiscal year 2014 included (i) growing core storm drainage market share, (ii) growing agriculture market share in each key state, (iii) managing pricing strategies to deliver budgeted performance levels, (iv) managing revenue and profitability performance of various Allied Products, (v) managing selling expenses and (vi) building leadership and talent in the sales organization.

No specific weightings are attached to any of the foregoing factors, which serve as a general guide for the Committee in determining whether the individual goals for each NEO have been achieved.

Payout Awards for Fiscal Year 2014

Based upon information provided by our vice president of human resources as well as the recommendations of our CEO with respect to each NEO, the Committee elected to exercise discretion and make a downward adjustment to the final payout awards for each NEO, notwithstanding the fact that for fiscal year 2014 we achieved Adjusted EBITDA and average debt balance levels of $147,009,000 and $396,701,000, respectively. In deciding to reduce the payout awards, the Committee considered the total compensation received by each NEO, in particular the cash payments resulting from the one-time special dividend on their respective stockholdings (as well as interests in the ESOP for each NEO excluding Mr. Chlapaty) and thereafter approved management’s recommendation to reduce the amount of the payout awards.

The target incentive awards under the Cash Incentive Plan, as well as the final approved payouts for fiscal year 2014 were as follows:


Named Executive Officer	Target Incentive Award ($)		Approved Payout
Joseph A. Chlapaty	$	665,000	$	300,000
Mark B. Sturgeon	$	213,750	$	115,000
Thomas M. Fussner	$	236,250	$	105,000
Ronald R. Vitarelli	$	206,250	$	100,000
Robert M. Klein	$	175,500	$	85,000

Long-Term Equity-Based Compensation

We maintain several equity-based incentive plans as described below under “—Equity-Base Incentive Plans”, including:

•

the ADS Amended 2000 Incentive Stock Option Plan (or the 2000 Plan),

•

the ADS 2008 Restricted Stock Plan (or the 2008 Plan), and

•

the ADS 2013 Stock Option Plan (or the 2013 Plan).

Our NEOs participate in all of the aforementioned plans (except that Mr. Chlapaty received no award grants under the 2000 Plan). We no longer make awards under the 2000 Plan, although additional options may continue to be issued on a periodic basis pursuant to the reload feature of the 2000 Plan.

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Long-term incentive compensation is an integral part of the total compensation for Company executives. The long-term equity-based incentives of the NEOs are reviewed on an annual basis. Each year, the Chief Executive Officer, with input from human resources, proposes long-term equity-based incentive grants, if any, for all NEOs, excluding himself, based on the aforementioned criteria. His proposal is subject to review and approval (with or without modifications) by the Committee. The long-term equity-based incentive grant, if any, for Mr. Chlapaty is initiated and approved by the Committee directly, subject to the review and final approval of our board of directors.

The Committee requested that management review the design of the long-term equity-based incentive program in consideration of the compensation guiding principles and the potential for an initial public offering.

Through May 2013, shares of restricted stock from the ADS 2008 Restricted Stock Plan were primarily used for long-term equity compensation for all executives, including NEOs. As part of the review of the executive compensation program in fiscal year 2014 the Committee determined non-qualified stock option grants would better align the compensation of our NEOs with our long-term growth. Accordingly, the Committee recommended and our board of directors approved adoption of the 2013 Plan.

In determining the amount of long-term equity incentives to grant in fiscal year 2014, the Committee considered (i) the comparison to the competitive marketplace for each executive, including NEOs, (ii) the comparative potential decrease, over the next several years, in compensation from the change in design of the annual cash incentive plan impacting all executives, including NEOs, and (iii) the potential for an initial public offering and the need to retain the executives thereafter. Upon consideration of these factors, the Committee approved a grant of options on September 1, 2013 to each of the executives to further encourage the retention and motivation of the executives throughout a potential transition to a public company.

Consistent with prior equity incentive grants, the non-qualified stock options awarded to the NEOs under the 2013 Plan in fiscal year 2014 are subject to a five-year vesting schedule (except for Mr. Chlapaty, whose options are subject to a four-year vesting schedule). The awards made in fiscal year 2014 contained no performance-based conditions. The awards of restricted stock and non-qualified stock options in fiscal year 2014 were as follows:


Named Executive Officer	Stock Option Awards		Restricted Stock Awards
Joseph A. Chlapaty		110,000		6,000
Mark B. Sturgeon		35,000		2,000
Thomas M. Fussner		35,000		2,500
Ronald R. Vitarelli		35,000		2,500
Robert M. Klein		30,000		1,500

Benefits and Executive Perquisites

The benefits provided to our NEOs are generally the same as those provided to our other salaried associates and include medical, vision and dental insurance, basic life insurance and accidental death and dismemberment insurance, short- and long-term disability insurance.

All of the NEOs, with the exception of Mr. Chlapaty, participate in our tax-qualified ESOP that covers employees who meet certain service requirements. See “— Equity-Based Incentive Plans —Employee Stock Ownership Plan” and “Description of Employee Stock Ownership Plan” for additional information regarding the ESOP.

All of the NEOs participate in a fully-insured executive medical reimbursement plan. In consideration of this benefit, Mr. Chlapaty contributed $12,000 in calendar year 2013 and the rest of the NEO’s contributed $6,000 in calendar year 2013 for dual participation in this plan as well as our medical, dental and vision plans. These contributions are deducted on a pre-tax basis.

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All of the NEOs are provided with an individually owned life insurance policy providing $200,000 of permanent whole life coverage with a term rider providing an initial death benefit of $200,000. This benefit is in recognition of the carve-out under our group term life insurance program that reduces the maximum benefit available from $450,000 to $50,000 for executives, including NEOs. The death benefit under the term rider is gradually replaced by paid-up additional permanent life insurance provided by the dividends on the policies. The policies also accrue cash values which are owned by the executive, or their designee, and may be available to them while the policies are in effect. Premiums for each policy are paid for by us and the premium is considered taxable income to the NEO.

We also provide our NEOs with certain perquisites. These perquisites include use of Company-owned or leased cars and reimbursement of car-related expenses, payment of automobile insurance premiums for Company provided and personal vehicles, reimbursement of country club or fitness membership dues. The Committee has determined that it is appropriate to provide these perquisites in order to attract and retain our NEOs by offering them compensation opportunities that are competitive with those offered by companies of similar size and scope. In determining the total compensation payable to our NEOs, the Committee considers perquisites in the context of the total compensation which our NEOs are eligible to receive. However, given the fact that perquisites represent a relatively small portion of the NEO’s total compensation, the availability of these perquisites does not materially influence the decisions made by the Committee with respect to other elements of the total compensation to which our NEOs are entitled or to which they are awarded.

Pursuant to the terms of his employment agreement, Mr. Chlapaty is entitled to the use of any Company-owned or leased aircraft at our expense for travel related to the performance of his duties on behalf of us and/or charitable uses and purposes. Mr. Chlapaty and certain other NEOs are also permitted to make personal use of Company aircraft. In fiscal year 2014, Mr. Chlapaty and Mr. Sturgeon made personal use of Company aircraft. The incremental cost of personal use of Company aircraft is calculated based on the average variable operating cost per hour flown, which includes fuel costs, aircraft maintenance and supplies, landing fees and trip related hanger and parking costs. Fixed costs that do not change based on usage such as hanger rental, aircraft lease payments, insurance and certain administrative expenses are excluded from the incremental cost calculation. If an aircraft flies empty before picking up or after dropping off a passenger flying for personal reasons, this “deadhead” segment is included in the incremental cost of the personal use. If an NEO is traveling on business utilizing Company aircraft and there is otherwise room available on the aircraft for the NEO’s spouse to accompany the NEO, the spouse is permitted to do so.

For a description of the perquisites received by our NEOs during fiscal year 2014, see the “All Other Compensation” column of our Summary Compensation Table below.

Tax and Accounting Considerations

While the accounting and tax treatment of compensation generally has not been a consideration in determining the amounts of compensation for our executive officers, the Committee and management have taken into account the accounting and tax impact of various program designs to balance the potential cost to us with the value to the executive.

The expenses associated with executive compensation issued to our executive officers and other key associates are reflected in our financial statements. We account for stock-based programs in accordance with the requirements of ASC Topic 718, which requires companies to recognize in the income statement the grant date value of equity-based compensation issued to associates over the vesting period of such awards.

Risk in Relation to Compensation Programs

We have performed an internal review of all of our material compensation programs and have concluded that there are no plans that provide meaningful incentives for employees, including our NEOs and additional executive officers, to take risks that would be reasonably likely to have a material adverse effect on us.

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Summary Compensation Table for Fiscal Year 2014

The following table summarizes the total compensation earned by each of our NEOs for the fiscal year ended March 31, 2014:


Name and Principal Position	Fiscal Year		Salary $ ⁽¹⁾		Bonus $		Stock Awards $ ⁽²⁾		Option Awards $ ⁽³⁾		Non-Equity Incentive Plan Compensation $ ⁽⁴⁾		All Other Compensation $ ⁽⁵⁾		Total $
Joseph A. Chlapaty		2014		454,167		—		385,200		3,221,680		300,000		136,588		4,197,635
President & Chief Executive Officer

Mark B. Sturgeon		2014		270,417		—		128,400		1,075,871		115,000		44,806		1,519,494
Executive Vice President, Chief Financial Officer, Secretary and Treasurer

Thomas M. Fussner		2014		308,750		—		160,500		1,025,080		105,000		26,654		1,520,984
Executive Vice President and Co-Chief Operating Officer

Ronald R. Vitarelli		2014		264,583		—		160,500		1,025,080		100,000		23,094		1,473,257
Executive Vice President and Co-Chief Operating Officer

Robert M. Klein		2014		261,667		—		96,300		878,640		85,000		18,122		1,254,729
Executive Vice President of Sales

(1)	Reflects adjustment to NEO salaries that went into effect as of September 1, 2013.

(2)

The amounts reported in this column are based on the aggregate grant date fair value of restricted stock awarded, computed in accordance FASB ASC Topic 718, Compensation — Stock Compensation. We calculated the estimated fair value of each share of restricted stock on the date of grant as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Employee Benefit Plans — Stock-Based Compensation Plans.”

(3)

The amounts reported in this column are based on the aggregate grant date fair value of stock options awarded, computed in accordance with the FASB ASC Topic 718. We calculated the estimated fair value of each option award on the date of grant using a Black-Scholes option pricing model as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Employee Benefit Plans — Stock-Based Compensation Plans.” The amount in this column for Mr. Sturgeon also includes the grant date fair value of reload options issued in connection with the exercise of previously granted options under the 2000 Plan. The dollar amount of the option awards in fiscal year 2014 related to reload options for Mr. Sturgeon is $50,791.

(4)	The amounts reported in this column consist of amounts to be paid under the Cash Incentive Plan for services rendered in fiscal year 2014, as discussed above under “—Compensation Discussion and Analysis — Components of Compensation — Annual Cash Incentive Compensation.”

(5)	The All Other Compensation column is made up of the following amounts for fiscal year 2014:


Name	Medical Reimbursement Plan Premiums		Life Insurance Premiums		Dividends on Unvested Restricted Stock ^(a)		Automobile Expenses ^(b)		Aircraft Use ^(c)		Social Membership Dues		Total $
Joseph A. Chlapaty	$	187	$	4,204	$	45,000	$	1,444	$	73,685	$	12,068	$	136,588
Mark B. Sturgeon	$	250	$	3,664	$	15,000	$	5,283	$	13,244	$	7,365	$	44,806
Thomas M. Fussner	$	250	$	3,834	$	18,750	$	2,200		—	$	1,620	$	26,654
Ronald R. Vitarelli	$	250	$	4,094	$	18,750		—		—		—	$	23,094
Robert M. Klein	$	250	$	2,854	$	11,250	$	1,100		—	$	2,668	$	18,122

(a)

On January 15, 2014, we paid a special cash dividend of $7.50 per share to all stockholders of record on January 2, 2014. In connection with this dividend and based on their respective equity holdings, our NEOs received such dividend payments with respect to unvested shares of restricted common stock, including those shares of restricted stock awarded to each NEO in fiscal year 2014.

(b)

Includes amounts associated with personal use of automobile and related automobile liability insurance expense.

(c)

Relates to the incremental cost for personal use of Company aircraft by the NEO. The incremental cost of personal use of Company aircraft is calculated based on the average variable operating cost per hour flown, which includes fuel costs, aircraft maintenance and supplies, landing fees and trip related hanger and parking costs. Fixed costs that do not change based on usage such as hanger rental, aircraft lease payments, insurance and certain administrative expenses are excluded from the incremental cost calculation. If an aircraft flies empty before picking up or after dropping off a passenger flying for personal reasons, this “deadhead” segment is included in the incremental cost of the personal use. If an NEO is traveling on business utilizing Company aircraft and there is otherwise room available on the aircraft for the NEO’s spouse to accompany the NEO, the spouse is permitted to do so. As there is no incremental cost to us for the spouse accompanying the executive on such flight, no amount has been included in the Summary Compensation Table with respect to such usage.

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Grants of Plan-Based Awards for Fiscal Year 2014

The following table provides information concerning awards granted to the NEOs in the last fiscal year under any plan:


Name	Grant Date			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards ⁽¹⁾						All Other Stock Awards: Number of Shares of Stock (#)		All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($) ⁽⁵⁾




				Threshold $		Target $		Maximum $
Joseph A. Chlapaty		N/A			332,500		665,000		1,330,000		—		—		—		—
		5/01/2013	⁽²⁾		—		—		—		6,000		—		—		385,200
		9/01/2013	⁽³⁾		—		—		—		—		110,000		64.20		3,221,680

Mark B. Sturgeon		N/A			106,875		213,750		427,500		—		—		—		—
		5/01/2013	⁽²⁾		—		—		—		2,000		—		—		128,400
		8/01/2013	⁽⁴⁾		—		—		—		—		1,734.18		64.20		50,791
		9/01/2013	⁽³⁾		—		—		—		—		35,000		64.20		1,025,080

Thomas M. Fussner		N/A			118,125		236,250		472,500		—		—		—		—
		5/01/2013	⁽²⁾		—		—		—		2,500		—		—		160,500
		9/01/2013	⁽³⁾		—		—		—		—		35,000		64.20		1,025,080

Ronald R. Vitarelli		N/A			103,125		206,250		412,500		—		—		—		—
		5/01/2013	⁽²⁾		—		—		—		2,500		—		—		160,500
		9/01/2013	⁽³⁾		—		—		—		—		35,000		64.20		1,025,080

Robert M. Klein		N/A			87,750		175,500		351,000		—		—		—		—
		5/01/2013	⁽²⁾		—		—		—		1,500		—		—		96,300
		9/01/2013	⁽³⁾		—		—		—		—		30,000		64.20		878,640

(1)

The amounts shown reflect the estimated payouts for fiscal year 2014 under the Cash Incentive Plan that the respective NEO would be eligible for assuming no use of discretion by the Committee in authorizing such payments. As discussed above under “— Compensation Discussion and Analysis — Components of Compensation — Annual Cash Incentive Compensation,” the Committee elected to exercise discretion and made a downward adjustment to the final award payouts for each NEO, which actual amounts awarded are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above.

(2)	Represents restricted stock awards granted under the 2008 Plan as part of our annual long-term equity grant, which vest over a five-year period in 20% installments each year, beginning with the first anniversary following the grant date.

(3)

Represents option awards granted under the 2013 Plan as part of our annual long-term equity grant, which vest over a five-year period in 20% installments each year, beginning with the first anniversary following the grant date (except for Mr. Chlapaty’s option award, which options vest over a four-year period in 25% installments each year, beginning with the first anniversary following the grant date). The vesting terms of these options will not accelerate upon completion of this offering.

(4)

Represents option award granted pursuant to the reload option provisions of outstanding option agreements under the 2000 Plan. For more information regarding reload options under the 2000 Plan, see “— Equity Based Incentive Plans — 2000 Incentive Stock Option Plan.” The reload option awards granted to Mr. Sturgeon vest in one-third increments beginning in the fifth year, provided however that all reload option awards will vest in full upon completion of this offering.

(5)

The amounts shown are based on the aggregate grant date fair value of restricted stock and stock options awarded, computed in accordance with FASB ASC Topic 718. We calculated the estimated fair value of (i) each restricted stock award on the date of grant and (ii) each option award on the date of grant using a Black-Scholes option pricing model, as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Employee Benefit Plans — Stock-Based Compensation Plans.”

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Outstanding Equity Awards at Fiscal Year Ended March 31, 2014

The following table sets forth the unexercised and unvested stock options and restricted stock held by NEOs at fiscal year-end. Each equity grant is shown separately for each NEO.


	Option Awards										Stock Awards
	Option Grant Date		Number of Securities Underlying Unexercised Options That Are Exercisable		Number of Securities Underlying Unexercised Options That Are Not Exercisable		Option Exercise Price		Option Expiration Date		Stock Award Grant Date		Number of Shares or Units of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not Vested ⁽⁴⁾
			Shares		Shares		$						Shares		$
Joseph A. Chlapaty
Stock Options ⁽¹⁾		9/01/13		—		110,000		64.20		3/31/23
Restricted Stock ⁽³⁾												7/09		1,200
Restricted Stock ⁽³⁾												4/10		2,400
Restricted Stock ⁽³⁾												5/11		1,800
Restricted Stock ⁽³⁾												5/12		4,800
Restricted Stock ⁽³⁾												5/13		6,000

Mark B. Sturgeon
Stock Options ⁽²⁾		4/27/05		3,321		—		21.37		3/31/15
Stock Options ⁽²⁾		4/26/06		11,600		—		36.15		3/31/16
Stock Options ⁽²⁾		4/25/07		6,325.152		3,115.374		50.70		3/31/17
Stock Options ⁽²⁾		7/22/09		—		6,092.872		44.40		3/31/19
Stock Options ⁽²⁾		7/21/10		—		3,072.063		50.60		3/31/20
Stock Options ⁽²⁾		8/01/12		—		1,921.657		59.25		3/31/22
Stock Options ⁽²⁾		9/01/13		—		1,734.177		64.20		3/31/23
Stock Options ⁽¹⁾		9/01/13		—		35,000		64.20		3/31/23
Restricted Stock ⁽³⁾												7/09		300
Restricted Stock ⁽³⁾												4/10		800
Restricted Stock ⁽³⁾												10/10		1,200
Restricted Stock ⁽³⁾												5/11		600
Restricted Stock ⁽³⁾												5/12		1,600
Restricted Stock ⁽³⁾												5/13		2,000

Thomas M. Fussner
Stock Options ⁽²⁾		4/25/07		2,891.720		1,424.280		50.70		3/31/23
Stock Options ⁽²⁾		7/22/09		—		10,738		44.40		3/31/19
Stock Options ⁽²⁾		7/21/10		—		5,168		50.60		7/31/20
Stock Options ⁽²⁾		5/03/11		—		4,675		50.35		3/31/21
Stock Options ⁽²⁾		8/01/12		—		3,935		59.25		3/31/22
Stock Options ⁽¹⁾		9/01/13		—		35,000		64.20		3/31/23
Restricted Stock ⁽³⁾												7/09		400
Restricted Stock ⁽³⁾												4/10		1,600
Restricted Stock ⁽³⁾												5/11		1,200
Restricted Stock ⁽³⁾												5/12		2,400
Restricted Stock ⁽³⁾												5/13		2,500

Robert M. Klein
Stock Options ⁽²⁾		4/27/05		7,140		—		21.37		3/31/15
Stock Options ⁽²⁾		4/26/06		12,000		—		36.15		3/31/16
Stock Options ⁽²⁾		4/25/07		5,940		3,060		50.70		3/31/17
Stock Options ⁽²⁾		8/01/12		—		6,849.95		59.25		3/31/22
Stock Options ⁽¹⁾		9/01/13		—		30,000		64.20		3/31/23
Restricted Stock ⁽³⁾												7/09		400
Restricted Stock ⁽³⁾												4/10		800
Restricted Stock ⁽³⁾												5/11		600
Restricted Stock ⁽³⁾												5/12		1,200
Restricted Stock ⁽³⁾												5/13		1,500

Ronald R. Vitarelli
Stock Options ⁽¹⁾		9/01/13		—		35,000		64.20		3/31/23
Restricted Stock ⁽³⁾												4/10		200
Restricted Stock ⁽³⁾												5/11		600
Restricted Stock ⁽³⁾												5/12		1,600
Restricted Stock ⁽³⁾												5/13		2,500

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(1)

Stock options issued pursuant to the 2013 Plan, which vest over a five-year period in 20% installments each year, beginning with the first anniversary following the grant date (except for Mr. Chlapaty’s option award, which vest over a four-year period in 25% installments each year). The vesting terms of these options will not accelerate upon completion of this offering.

(2)

Stock options issued pursuant to the 2000 Plan, which vest over a three-year period in one-third installments each year, beginning with the fifth anniversary following the grant date, provided however that all remaining unvested options will vest in full immediately prior to the completion of this offering.

(3)	Restricted stock issued pursuant to the 2008 Plan, which vest over a five-year period in 20% installments each year, beginning with the first anniversary following the grant date.

(4)	The market price for our common stock is based on the assumed initial public offering price of our common stock of $ per share, which is the midpoint of the price range on the cover page of this prospectus.

Option Exercises and Stock Vested for Fiscal Year 2014

The following table sets forth for each NEO the exercises of stock options and the vesting of stock awards during fiscal year 2014:

Option Exercises and Stock Vested


	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise		Value Realized on Exercise ⁽¹⁾		Number of Shares Acquired on Vesting ⁽²⁾		Value Realized on Vesting ⁽¹⁾
	#		$		#		$
Joseph A. Chlapaty		—		—		5,400		346,680
Mark B. Sturgeon		8,679		388,702		2,160		138,672
Thomas M. Fussner		8,316		170,466		2,600		166,920
Robert M. Klein		20,860		961,354		1,700		109,140
Ronald R. Vitarelli		—		—		720		46,224

(1)

Amounts shown represent (i) with respect to option awards, the difference between the fair market value of our common stock and the option exercise price at the time of the options’ exercise and (ii) with respect to stock awards, the value of the restricted shares that vest based on the fair market value of our common stock. The foregoing values do not necessarily equate to cash realized from the sale of shares acquired upon the exercise of options or vesting of restricted stock as shares were not sold on exercise or upon vesting, but continue to be held by the NEO. Value realized on exercise and vesting is calculated based upon the fair market value of our common stock as of the date of exercise or vesting, as applicable, as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Employee Benefit Plans — Stock-Based Compensation Plans.”

(2)	Restricted stock vests over a five year period in 20% installments each year, beginning with the first anniversary following the grant date. The number of shares listed in this column reflects the total number of shares of restricted stock that vested during fiscal year 2014.

Pension Benefits and Nonqualified Deferred Compensation for Fiscal Year 2014

We do not provide any defined benefit plans or nonqualified deferred compensation plans to our NEOs.

Employment Agreements

Our NEOs have each entered into an amended and restated employment agreement with us, which were negotiated between each NEO and us at arms-length. Certain elements of the compensation payable to our NEOs are set forth in these employment agreements, including initial base salary (subject to periodic adjustment) and scope of incentive compensation and benefits. These employment agreements also require us to make certain payments upon termination or change in control, as set forth below in “— Potential Payments upon Termination or Change in Control.”

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Joseph A. Chlapaty . On June 20, 2014, we entered into an amended and restated employment agreement with Mr. Chlapaty, our Chief Executive Officer. The employment agreement provides for an initial employment period ending March 31, 2015. Beginning on January 1, 2015 and each January 1 thereafter, the then remaining term of the employment agreement will be extended automatically for an additional one-year period until termination pursuant to its terms, including termination by either party through notice prior to the January 1 renewal date. Mr. Chlapaty’s current annual base salary as adjusted as of September 1, 2013 is $475,000 and he is entitled to receive annual incentive compensation. The employment agreement also contains customary non-competition and non-solicitation covenants of Mr. Chlapaty that apply during his employment and within a period of two years following the termination of his employment with us and a confidentiality covenant of indefinite duration.

Mark B. Sturgeon . On June 20, 2014, we entered into an amended and restated employment agreement with Mr. Sturgeon, our Chief Financial Officer. The employment agreement provides for an initial employment period ending March 31, 2015. Beginning on January 1, 2015 and each January 1 thereafter, the then remaining term of the employment agreement will be extended automatically for an additional one-year period until termination pursuant to its terms, including termination by either party through notice prior to the January 1 renewal date. Mr. Sturgeon’s current annual base salary as adjusted as of September 1, 2013 is $285,000 and he is entitled to receive annual incentive compensation. The employment agreement also contains customary non-competition and non-solicitation covenants of Mr. Sturgeon that apply during his employment and within a period of two years following the termination of his employment with us. It also includes a confidentiality covenant of indefinite duration.

Thomas M. Fussner . On June 20, 2014, we entered into an amended and restated employment agreement with Mr. Fussner, our Co-Chief Operating Officer. The employment agreement provides for an initial employment period ending March 31, 2015. Beginning on January 1, 2015 and each January 1 thereafter, the then remaining term of the employment agreement will be extended automatically for an additional one-year period until termination pursuant to its terms, including termination by either party through notice prior to the January 1 renewal date. Mr. Fussner’s current annual base salary as adjusted as of September 1, 2013 is $315,000 and he is entitled to receive annual incentive compensation. The employment agreement also contains customary non-competition and non-solicitation covenants of Mr. Fussner that apply during his employment and within a period of two years following the termination of his employment with us. It also includes a confidentiality covenant of indefinite duration.

Ronald R. Vitarelli . On June 20, 2014, we entered into an amended and restated employment agreement with Mr. Vitarelli, our Co-Chief Operating Officer. The employment agreement provides for an initial employment period ending March 31, 2017. Beginning on January 1, 2017 and each January 1 thereafter, the then remaining term of the employment agreement will be extended automatically for an additional one-year period until termination pursuant to its terms, including termination by either party through notice prior to the January 1 renewal date. Mr. Vitarelli’s current annual base salary as adjusted as of September 1, 2013 is $275,000 and he is entitled to receive annual incentive compensation. The employment agreement also contains customary non-competition and non-solicitation covenants of Mr. Vitarelli that apply during his employment and within a period of two years following the termination of his employment with us. It also includes a confidentiality covenant of indefinite duration.

Robert M. Klein . On June 20, 2014, we entered into an amended and restated employment agreement with Mr. Klein, our Executive Vice President. The employment agreement provides for an initial employment period ending March 31, 2015. Beginning on January 1, 2015 and each January 1 thereafter, the then remaining term of the employment agreement will be extended automatically for an additional one-year period until termination pursuant to its terms, including termination by either party through notice prior to the January 1 renewal date. Mr. Klein’s current annual base salary as adjusted as of September 1, 2013 is $270,000 and he is entitled to receive annual incentive compensation. The employment agreement also contains customary non-competition and non-solicitation covenants of Mr. Klein that apply during his employment and within a period of two years following the termination of his employment with us. It also includes a confidentiality covenant of indefinite duration.

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Potential Payments upon Termination or Change in Control

We have outstanding employment agreements with each of our NEOs as described above under “— Employment Agreements” which require the payment of certain benefits to each NEO under certain specified circumstances, which we refer to as Specified Circumstances. Our employment agreements with each NEO identify the following as Specified Circumstances that would require the payment of certain benefits:

•

termination by us at the end of the executive’s initial employment period or renewal period by giving three-month notice,

•

death or disability,

•

termination by the executive at the end of the executive’s initial employment period or renewal period by giving three-month notice, if the executive will have attained the age of 65 years (or 68 years in the case of Mr. Chlapaty) on the employment termination date,

•

termination by the executive upon our breach of material covenant in the employment agreement and failure to cure after receiving notice of such breach,

•

termination by the executive for good reason, which includes the following without the executive’s consent: (i) a reduction in base salary; (ii) our action which would adversely affect the executive’s participation in, or materially reduce his benefits under, any material benefit plan or equity incentive plan; (iii) our action which would adversely affect or reduce the executive’s participation in, or materially reduces the maximum potential incentive compensation available to the executive under any of our material incentive compensation plan or program; (iv) the assignment of the executive to a position of a materially lesser status or degree of responsibility; or (v) the assignment of the executive to a primary work location (A) outside the United States or (B) at which (I) neither we nor our affiliates maintain a significant manufacturing facility or significant office or (II) by virtue of such location, the ability of the executive to perform his duties is materially impaired, and

•

termination by us for no reason or for any reason other than mutual agreement for termination or termination for cause. “Cause” includes the executive’s non-performance of duties, failure to adhere to our policies, misappropriation of our property, conviction of felony or equivalent, or other crimes subject to possible imprisonment or involving theft, misappropriation, embezzlement, fraud or dishonesty.

In the event of termination as a result of the Specified Circumstances described above, each NEO shall be entitled to receive payments and benefits as follows:

•

for the 24 months (or 18 months in the case of Mr. Vitarelli) following the termination date, we will continue to pay the executive’s base salary, subject to reduction by the proceeds actually paid to the executive under any disability insurance policies maintained by us if the termination is due to the executive’s disability,

•

after the conclusion of our fiscal year in which the termination occurs, we will make a lump sum cash payment in an amount equal to the executive’s accrued bonus for the prior fiscal year,

•

after the conclusion of our first full fiscal year immediately following the conclusion of our fiscal year in which the termination occurs, we will pay the executive (except for Mr. Vitarelli) a lump sum cash payment, which we refer to as the Termination Bonus I, as calculated under the applicable employment agreement, and

•

after the conclusion of our second full fiscal year immediately following the conclusion of our fiscal year in which the termination occurs, we will pay the executive (except for Mr. Vitarelli) a lump sum cash payment, which we refer to as the Termination Bonus II, as calculated under the applicable employment agreement.

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The payment of the above 24 months base salary, Termination Bonus I and Termination Bonus II is conditioned upon the executive’s release of claims against us.

If the executive terminates employment with us at the end of his initial employment period or renewal period by giving three-month notice, but the executive will not have attained the age of 65 years (or 68 years in the case of Mr. Chlapaty) on the employment termination date, then after the conclusion of the fiscal year in which the termination occurs, we will pay to the executive a lump sum cash payment in an amount equal to the accrued bonus for this fiscal year.

The employment agreements also provide that, notwithstanding anything to the contrary in any equity incentive plan or related agreements, if the executive’s employment is terminated by us for any reason other than for cause, all unvested restricted shares under the 2008 Plan and all unvested options under the 2000 Plan or the 2013 Plan (or only the restricted shares under the 2008 Plan or the options under the 2013 Plan in the case of Mr. Chlapaty) awarded to the executive will fully vest at the employment termination date. Such vested options will be exercisable during the 90 consecutive day period immediately following the employment termination date.

Our stock option agreements with each NEO under the 2000 Plan and the 2013 Plan provide that (i) upon death or disability of the executive, all the options may be exercised during the one-year period commencing on the date of the executive’s death or disability and (ii) upon termination of employment of the executive for any reason other than for death, disability or for cause, all the options may be exercised during the three-month period commencing on the employment termination date.

Change in Control . Under the 2000 Plan, our stock option agreements with the executives provide that all the options may be exercised by the executives commencing at the time of a “change in control.” A “change in control” for this purpose refers to: (i) our entry into an agreement to merge, consolidate or reorganize into or with another corporation or other legal person, and as a result less than 51% of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction will be held in the aggregate by officers, directors and holders of a beneficial interest in our voting securities immediately prior to such transaction; (ii) our entry into an agreement to sell or otherwise transfer all or substantially all of its assets to any other corporation or other legal person, and as a result a beneficial interest in less than 51% of the combined voting power of the then-outstanding securities of such corporation or person immediately after such sale or transfer is held in the aggregate by officers, directors and holders of a beneficial interest in our voting securities immediately prior to such sale or transfer; or (iii) during any continuous 12-month period our stockholders’ sale of or entry into an agreement or agreements to sell to anyone other than us our securities representing 50% or more of our combined voting power at the beginning of such 12-month period.

Under the 2008 Plan, our restricted stock agreements with the executives provide that the restricted shares will vest effective at the time of a “change in control.” A “change in control” for this purpose refers to the occurrence of a transaction or series of transactions following which less than a majority of the voting power of us a successor entity is held by the persons who hold the same with respect to us immediately prior to such transaction or series of transactions.

Under the 2013 Plan, our stock option agreements with the executives provide that all the options may be exercised by the executives commencing at the time of a “change in control.” A “change in control” for this purpose refers to the occurrence of a transaction or series of transactions following which less than a majority of the voting power of us a successor entity is held by the persons who hold the same with respect to us immediately prior to such transaction or series of transactions.

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Potential Payment . The following table sets forth the payments and benefits that would be received by each NEO in the event a termination of employment or a change-in-control of the Company had occurred on March 31, 2014, over and above any payments or benefits he otherwise would already have been entitled to or vested in on such date under any employment contract or other plan of the Company. The NEO would receive other payments and benefits as well upon termination of employment to which they were already entitled or vested in on such date. The following table assumes in the case of each NEO that the amended and restated employment agreement for each NEO was in effect as of March 31, 2014. The actual amounts to be paid can only be determined at the time of such NEO’s separation from us and could therefore be more or less than the amounts set forth below. For the purposes of the calculations in the table, payments that would be made over time have been presented as a lump sum value.


Name	Severance Payment $		Bonus Payment ⁽⁴⁾ $		Value of Accelerated Equity ⁽⁵⁾ $		Total $
Joseph A. Chlapaty
Specified Circumstances ⁽¹⁾	$	950,000	$	600,000	$	1,040,040	$	2,590,040
Other Terminations ⁽²⁾	$	950,000	$	600,000	$	—	$	1,550,000
Change in Control ⁽³⁾	$	—	$	—	$	1,040,040	$	1,040,040

Mark B. Sturgeon
Specified Circumstances ⁽¹⁾	$	570,000	$	230,000	$	631,289	$	1,431,289
Other Terminations ⁽²⁾	$	570,000	$	230,000	$	—	$	800,000
Change in Control ⁽³⁾	$	—	$	—	$	631,289	$	631,289

Thomas M. Fussner
Specified Circumstances ⁽¹⁾	$	630,000	$	210,000	$	906,372	$	1,746,372
Other Terminations ⁽²⁾	$	630,000	$	210,000	$	—	$	840,000
Change in Control ⁽³⁾	$	—	$	—	$	906,372	$	906,372

Ronald R. Vitarelli
Specified Circumstances ⁽¹⁾	$	412,500	$	—	$	314,580	$	727,080
Other Terminations ⁽²⁾	$	412,500	$	—	$	—	$	412,500
Change in Control ⁽³⁾	$	—	$	—	$	314,580	$	314,580

Robert M. Klein
Specified Circumstances ⁽¹⁾	$	540,000	$	170,000	$	364,117	$	1,074,117
Other Terminations ⁽²⁾	$	540,000	$	170,000	$	—	$	710,000
Change in Control ⁽³⁾	$	—	$	—	$	364,117	$	364,117

(1)	Specified Circumstances include termination (i) by the Company and the end of the respective employment period, (ii) the death of the respective NEO, (iii) the disability of the respective NEO, and (iv) by the Company for no reason or other reason.

(2)

Other Terminations include termination (i) by the NEO at the end of the respective employment period if such NEO has obtained the age of sixty-five (65) (and with respect to Mr. Chlapaty, 68), (ii) by the NEO following a breach by the Company of any of its material covenants or agreements contained in the NEO’s employment agreement not otherwise cured and (iii) by the NEO for Good Reason (as such term is described above).

(3)

The Company does not provide special change-in-control benefits to NEOs. The Company’s only change-in-control arrangement is accelerated vesting of certain equity awards. No NEO is entitled to any payment or accelerated benefit in connection with a change-in-control of the Company, except for accelerated vesting of stock options granted and restricted stock units granted under the (i) 2000 Stock Option Plan, (ii) the 2008 Restricted Stock Plan or (iii) the 2013 Stock Option Plan. Change-in-Control is defined above.

(4)

2014 bonus amounts were assumed, although actual bonus would depend on performance of the Company in the relevant two years following termination. Bonus payments for subsequent years, if any, upon termination for each NEO (except for Mr. Vitarelli) are based on a formula equal to the lesser of the bonus paid (i) for the full year immediately prior to termination and (ii) certain bonus calculations earned for the two years following termination. Based on such formula, the bonus payments in the presented table are capped at 2xs the bonus paid for fiscal year end March 31, 2014 (the amount shown on such table) but may be less based on the productivity of the Company for subsequent years. The anticipated bonus structure to be included in the respective employment agreements will provide that bonus payments cannot exceed the amounts shown.

(5)

Amounts include the acceleration of stock options, calculated by multiplying the number of shares underlying each stock option whose vesting would be accelerated or that would vest during the notice period, as the case may be, by the excess of $64.20, which was the assumed share value as of March 31, 2014, over the exercise price of such stock option. Acceleration of restricted stock units are also

included and were calculated by multiplying the number of shares underlying each restricted stock unit whose vesting would be accelerated by $64.20.

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Equity-Based Incentive Plans

2000 Incentive Stock Option Plan

Options granted pursuant to the 2000 Plan constitute incentive stock options for the federal income tax purposes. Any option granted pursuant to the 2000 Plan must be granted within 10 years from the effective date of its adoption. As of September 2008, further grants under the 2000 Plan were discontinued, although existing stock option grants continue to vest and grant recipients may continue to receive reload options under the 2000 Plan as described below.

Shares Under the Plan. The maximum aggregate number of shares available to be issued under the 2000 Plan is 1,000,000, subject to adjustment in the event of changes in our capitalization. As of March 31, 2014, options to purchase 194,005 shares of our common stock were still outstanding and 249,686 shares of our common stock were available for future grant under the 2000 Plan. The maximum aggregate fair market value (determined as of the time the option is granted) of all stock with respect to which incentive stock options may be exercisable by an optionee for the first time in any calendar year under the 2000 Plan and any of our other incentive stock option plans cannot exceed $100,000. Shares issued under the 2000 Plan may be authorized and unissued shares or shares held by us in our treasury.

Terms and Conditions of Options . Each option will be evidenced by a written option agreement in such form as approved by our board of directors. The option agreement may contain conditions for grant of options (such as an employee’s entry into an employment agreement with us or such employee’s agreement on continued employment with us) and adjustment of the underlying shares upon changes in our capitalization. The option agreement shall set forth the number of underlying shares, option price no less than 100% of the fair market value of the underlying share as of the date of grant, period of exercise no longer than 10 years after the date of grant, and dates and conditions for exercise of the option. The option price may be paid in cash, shares of our common stock, a combination of cash and shares or such other consideration as determined by our board. If an optionee exercises an option and pays some or all of the option price with shares of our common stock, such optionee shall be granted a reload option to purchase the number of shares equal to the number of shares used as payment of the option price, subject to adjustment made pursuant to the limitations on the number of shares available for grant under the 2000 Plan. Pursuant to the terms of each incentive stock option award agreement, the vesting for all option awards shall accelerate and become fully vested upon completion of this offering.

Reload Options. In the event that an option holder exercises an option and pays some or all of the option price with shares of common stock, such option holder will receive a reload option to purchase the same number of shares as used to pay the exercise price, with the grant date for any reload option being the next date during the month of July during which our board of directors holds a meeting or, if no such meeting is held, the next date thereafter on which our board of directors holds a meeting. Such reload options shall have the same terms and conditions associated with grants under the 2000 Plan, including applicable vesting requirements. The exercise price for any new reload option shall equal to the then current fair market value for common stock. Given the discontinuation of the 2000 Plan, the only additional options that are issued under the 2000 Plan are those associated with reload options.

2008 Restricted Stock Plan

The purpose of the 2008 Plan is to afford an incentive to, and encourage stock ownership by, our key employees so that such employees may acquire or increase their proprietary interest in our success and be encouraged to remain in our employ. Awards under the 2008 Plan must be made before September 15, 2018.

Administration . Our board of directors supervises the administration of the 2008 Plan. Subject to the provisions of the 2008 Plan, the board has conclusive authority to construe the 2008 Plan and any restricted stock agreement entered thereunder, and to establish and amend the administrative policies for the administration of the 2008 Plan.

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Eligibility . Any of our or our subsidiaries’ directors or employees is eligible to participate in the 2008 Plan.

Shares Available . The maximum aggregate number of shares available to be issued under the 2008 Plan is 215,000, subject to adjustment in the event of changes in our capitalization. Such shares must be made available solely from our treasury shares. As of March 31, 2014, 70,630 restricted shares of our common stock were available for future grant under the 2008 Plan.

Participation . Our board of directors will select participants and determine the terms of the awards under the 2008 Plan, which will set forth in a restricted stock agreement.

Terms of Awards . The awards of restricted stock will be subject to the terms and restrictions as determined by our board of directors, which may also modify, or accelerate the termination of, such restrictions. During the period in which any shares are subject to restrictions, the board may grant to the recipient of the award all or any of the rights of a shareholder with respect to such shares, including the right to vote and to receive dividends. The 2008 Plan authorizes our board of directors (i) to grant awards to any participant calculated as a percentage of such participant’s base pay and (ii) to determine the amount of such award based on achievement of a target. In addition, the board may choose, at the time of the grant of an award, to include as part of such award an entitlement to receive dividends or dividend equivalents, subject to such terms and restrictions as the board may establish. The grant of awards is contingent upon the participant’s execution of an executive responsibility agreement, or such other non-competition, non-solicitation and/or nondisclosure agreement as we may require.

Amendment . We may, by action of our board of directors, amend or terminate the 2008 Plan at any time, or, by action of the board with the consent of the anticipant, to amend or terminate any outstanding award of restricted stock.

2013 Stock Option Plan

The purpose of the 2013 Plan is to afford an incentive to, and encourage stock ownership by, our officers and other key employees so that such employees may acquire or increase their proprietary interest in our success and be encouraged to remain in our employ. Options granted pursuant to the 2013 Plan will not constitute incentive stock options for the federal income tax purposes unless expressly designated by our board of directors. Any option granted pursuant to the 2013 Plan must be granted within 10 years from the effective date of its adoption.

Shares Under the Plan. The maximum aggregate number of shares available to be issued under the 2013 Plan is 500,000, subject to adjustment in the event of changes in our capitalization. As of March 31, 2014, options to purchase 406,000 shares of our common stock were still outstanding and 94,000 shares of our common stock were available for future grant under the 2013 Plan. The maximum aggregate fair market value (determined as of the time the option is granted) of all stock with respect to which incentive stock options may be exercisable by an optionee for the first time in any calendar year under the 2013 Plan and any of our other incentive stock option plans cannot exceed $100,000. Shares issued under the 2013 Plan may be authorized and unissued shares or shares held by us in our treasury.

Administration . Our board of directors administers the 2013 Plan. Subject to the provisions of the 2013 Plan, the board has the discretion to determine the employees to be granted options and the number of shares subject to each option (except that options granted to members of the board are subject to the approval of a majority of the our disinterested directors), the time to grant options, the option price, the time and duration to exercise the options. Subject to the terms of the 2013 Plan, the board also has the discretion to specify additional conditions to the grant and exercise of any option as well as interpret the provisions of, and any option granted under, the 2013 Plan.

Eligible Employees . Options will be granted to our officers and other key employees as our board of directors select from time to time. However, for any incentive stock options, (i) no employee can be granted an

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option if such employee owns stock possessing more than 10% of the total combined voting power of all classes of stock of ours or of any of our subsidiaries unless the option price is at least 110% of the fair market value of the underlying shares and such option is not exercisable after the expiration of five years from the date such option is granted, and (ii) such employees must execute a non-competition and non-disclosure agreement in order to receive grant of the options.

Terms and Conditions of Options . Each option will be evidenced by a written option agreement in such form as approved by our board of directors. The option agreement may contain conditions for grant of options (such as an employee’s entry into an employment agreement with us or such employee’s agreement on continued employment with us) and adjustment of the underlying shares upon changes in our capitalization. The option agreement shall set forth the number of underlying shares, option price no less than 100% of the fair market value of the underlying share as of the date of grant, period of exercise no longer than 10 years after the date of grant, and dates and conditions for exercise of the option. The option price may be paid in cash, shares of our common stock, a combination of cash and shares or such other consideration as determined by our board. If an optionee exercises an option and pays some or all of the option price with shares of our common stock, such optionee shall be granted a reload option to purchase the number of shares equal to the number of shares used as payment of the option price, subject to adjustment made pursuant to the limitations on the number of shares available for grant under the 2013 Plan. Option awards under the 2013 Plan shall not fully vest or further accelerate upon completion of this offering.

Amendment . Our board of directors may, with respect to any shares of our common stock not subject to options at such time, discontinue or amend the 2013 Plan in any respect as it deems advisable. However, without the approval of our shareholders, the board cannot increase the aggregate number of shares subject to the 2013 Plan, change the eligibility of employees for participation in the 2013 Plan, issue options with an option price of less than 100% of the fair market value of the shares, or make other amendments which will cause options issued to fail to qualify as incentive stock options for the federal income tax purposes.

Employee Stock Ownership Plan

We sponsor a tax-qualified employee stock ownership plan and trust, or ESOP, that covers our employees who meet certain service requirements, including all of our NEOs except for Mr. Chlapaty, who does not participate in the ESOP. The ESOP was established effective April 1, 1993, and was originally funded with a 30-year term loan from us as well as shares of our convertible preferred stock through a transfer of assets from our profit sharing retirement plan. The loan is secured by a pledge of unallocated convertible preferred stock purchased by the ESOP with such loan proceeds that has not yet been released from the pledge (as a result of ESOP payments on the loan) and allocated to ESOP accounts. The ESOP operates as a leveraged ESOP and was designed to enable eligible employees to acquire stock ownership interests in us by virtue of their accounts under the ESOP. See “Description of Employee Stock Ownership Plan” for a description of the ESOP.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information as of , 2014 with respect to the beneficial ownership of our common stock by:

•

each person known to own beneficially more than 5% of our common stock;

•

each of the named executive officers;

•

each director;

•

all directors and executive officers as a group; and

•

the selling stockholders.

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days of the determination date such as pursuant to the conversion of our convertible preferred stock or the exercise of stock options, which in the case of the following table is , 2014. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

The percentage of beneficial ownership prior to this offering is based on 10,147,437 shares of our common stock outstanding as of March 31, 2014, plus, in the case of the ESOP, the number of shares of our common stock to be issued upon the conversion of our convertible preferred stock, in each case as adjusted to reflect a -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. The percentage of beneficial ownership following this offering is based on shares of common stock outstanding, after giving effect to the -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part. The number of shares beneficially owned by each entity or individual is determined pursuant to Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose.

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Except as otherwise indicated in the footnotes to this table, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock. Unless otherwise indicated, the address for each individual listed below is c/o Advanced Drainage Systems, Inc., 4640 Trueman Boulevard, Hilliard, Ohio 43026.


	Shares Beneficially Owned Before this Offering					Number of Shares Being Offered	Shares Beneficially Owned After this Offering		Shares Beneficially Owned After this Offering Assuming Full Exercise of Overallotment Option
Name of Beneficial Owner	Number of Shares		Percentage of Shares			Number of Shares Being Offered	Number of Shares	Percentage of Shares	Number of Shares	Percentage of Shares
*Greater than 5% Stockholders*
ASP ADS Investco, LLC ⁽¹⁾		5,833,000		57.48	%
ESOP ⁽²⁾		4,270,044		29.62	%
University of Notre Dame ⁽³⁾		1,026,394		10.11	%
Joseph A. Chlapaty ⁽⁴⁾		2,108,000		20.77	%

*Directors and Named Executive Officers (not listed above):*
Mark B. Sturgeon ⁽⁵⁾		93,593		0.92	%
Thomas M. Fussner ⁽⁶⁾		121,482		1.20	%
Ronald R. Vitarelli ⁽⁷⁾		14,100		0.14	%
Robert M. Klein ⁽⁸⁾		65,124		0.64	%
Robert M. Eversole		1,938		0.02	%
Alexander R. Fischer		—		—
Tanya Fratto		—		—
M.A. (Mark) Haney		—		—
David L. Horing ⁽⁹⁾		—		—
C. Robert Kidder		—		—
Mark A. Lovett ⁽¹⁰⁾		—		—
Richard A. Rosenthal		2,211		0.02	%
Abigail S. Wexner		—		—
Scott M. Wolff ⁽¹¹⁾		—		—
All current directors and executive officers as a group (15 persons)		2,406,448		23.58	%

*	Less than 1%

(1)

Represents shares held by ASP ADS Investco, LLC, a Delaware limited liability company. American Securities Partners V, L.P., American Securities Partners V(B), L.P. and American Securities Partners V(C), L.P., collectively referred to as the ASP Sponsors, are owners of more than 99% of the membership interests in ASP ADS Investco, LLC. American Securities Associates V, LLC is the general partner of each ASP Sponsor. American Securities LLC provides investment advisory services to each ASP Sponsor and to American Securities Associates V, LLC, and as such may be deemed to have indirect beneficial ownership of the shares held by ASP ADS Investco, LLC. The address for ASP ADS Investco, LLC is c/o American Securities LLC, 299 Park Avenue, 34th Floor, New York, NY 10171. As referenced in footnotes (9), (10) and (11) below, each of Messrs. Horing, Lovett and Wolff may be deemed to have shared voting and investment power over the shares held by ASP ADS Investco, LLC. Such individuals disclaim beneficial ownership of the shares of common stock held by ASP ADS Investco, LLC, except to the extent of their pecuniary interests therein.

(2)	Consists of shares of common stock issuable upon the exercise of conversion option for all the 5,551,279 shares of 2.50% Cumulative Convertible Voting Preferred Stock held by the ESOP at a ratio of 1-to-0.7692. See “Description of Employee Stock Ownership Plan.”

(3)	The address of the University of Notre Dame is University of Notre Dame, Investment office, Eddy Street Commons at Notre Dame, 1251 N. Eddy St., Suite 400, South Bend, IN 46617-1403.

(4)

Includes, with respect to Joseph A. Chlapaty, 6,000 shares of common stock directly owned by Mr. Chlapaty, 27,000 restricted shares of common stock owned by Mr. Chlapaty as to which Mr. Chlapaty has sole voting power, 2,075,000 shares of common stock owned of record by the Joseph A. Chlapaty Trust, as to which Mr. Chlapaty, as trustee, has voting and investment power, but excludes 20,000 shares of common stock directly owned by Mr. Chlapaty’s children and 180,120 shares of common stock beneficially owned by

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Mr. Chlapaty’s children through irrevocable trusts of which Mr. Chlapaty is not a trustee. Mr. Chlapaty disclaims beneficial ownership of the above excluded shares except to the extent of any pecuniary interest (as defined in Rule 16a–1(a)(2) promulgated under the Exchange Act) that he may have as such excluded shares.

(5)

Includes, with respect to Mark B. Sturgeon, 82,093 shares of common stock directly owned by Mr. Sturgeon, 11,500 restricted shares of common stock owned by Mr. Sturgeon as to which Mr. Sturgeon has sole voting power, and 24,362 shares of common stock issuable upon the exercise of vested stock options (or vesting within 60 days of March 31, 2014).

(6)

Includes, with respect to Thomas M. Fussner, 107,982 shares of common stock directly owned by Mr. Fussner, 13,500 restricted shares of common stock owned by Mr. Fussner as to which Mr. Fussner has sole voting power, and 4,316 shares of common stock issuable upon the exercise of vested stock options (or vesting within 60 days of March 31, 2014).

(7)

Includes, with respect to Ronald R. Vitarelli, 8,000 shares of common stock directly owned by Mr. Vitarelli, 6,100 restricted shares of common stock owned by Mr. Vitarelli as to which Mr. Vitarelli has sole voting power, and zero shares of common stock issuable upon the exercise of vested stock options (or vesting within 60 days of March 31, 2014).

(8)

Includes, with respect to Robert M. Klein, 57,124 shares of common stock directly owned by Mr. Klein, 8,000 restricted shares of common stock owned by Mr. Klein as to which Mr. Klein has sole voting power, and 28,140 shares of common stock issuable upon the exercise of vested stock options (or vesting within 60 days of March 31, 2014).

(9)

Mr. Horing may be deemed to have shared voting and investment power of the shares held by ASP ADS Investco LLC in his capacity as a Managing Director of American Securities and as a managing member of certain funds managed by American Securities as referenced in footnote (1) above. Mr. Horing disclaims beneficial ownership of the shares of common stock owned by ASP ADS Investco, LLC, except to the extent of his pecuniary interest therein, as such shares are owned and held by the ASP Sponsors referenced in footnote (1) above.

(10)

Mr. Lovett may be deemed to have shared voting and investment power of the shares held by ASP ADS Investco LLC in his capacity as a Vice President of American Securities, and serves on our board of directors as a representative of ASP ADS Investco, LLC. Mr. Lovett disclaims beneficial ownership of the shares of common stock owned by ASP ADS Investco, LLC, except to the extent of his pecuniary interest therein, as such shares are owned and held by the ASP Sponsors referenced in footnote (1) above.

(11)

Mr. Wolff may be deemed to have shared voting and investment power of the shares held by ASP ADS Investco LLC in his capacity as a Managing Director of American Securities, and serves on our board of directors as a representative of ASP ADS Investco, LLC. Mr. Wolff disclaims beneficial ownership of the shares of common stock owned by ASP ADS Investco, LLC, except to the extent of his pecuniary interest therein, as such shares are owned and held by the ASP Sponsors referenced in footnote (1) above.

The following table sets forth information as of March 31, 2014 with respect to the beneficial ownership of our convertible preferred stock, all of which is owned by the ESOP. None of our current directors or executive officers owns any of the outstanding shares of our convertible preferred stock.

Title of class

Name and address

of beneficial owner

Amount and nature of
beneficial ownership

Percent of
class

2.50% Cumulative Convertible Voting
Preferred Stock

ADS Employee Stock Ownership Plan

c/o Advanced Drainage Systems, Inc., 4640 Trueman Boulevard, Hilliard, Ohio 43026

5,551,279

100

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CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

Stockholders’ agreement and stockholder arrangements

In connection with the investment in our common stock by ASP ADS Investco, LLC, an affiliate of American Securities, in 2010, certain of our stockholders, including ASP ADS Investco, LLC, entered into an amended and restated stockholders’ agreement which amended and restated the original stockholders’ agreement established in June of 1988 by certain stockholders and previous equity sponsors. The stockholders’ agreement provides, among other things, that ASP ADS Investco, LLC is currently entitled to elect (or cause to be elected) four out of 11 of our directors. The stockholders’ agreement will be terminated contingent upon, and effective at the time of, consummation of this offering and it will be replaced by a registration rights agreement with certain of our stockholders, including ASP ADS Investco, LLC.

Registration Rights Agreement

Contingent upon, and effective at the time of, consummation of this offering, we will be a party to a registration rights agreement, or the Registration Rights Agreement, with certain of our stockholders, including ASP ADS Investco, LLC. The Registration Rights Agreement will grant to certain of our stockholders, including ASP ADS Investco, LLC, the right to cause us, generally at our own expense, to use our reasonable best efforts to register certain of our securities held by ASP ADS Investco, LLC for public resale, subject to certain limitations. In the event we register any of our common stock following our initial public offering, certain of our stockholders, including ASP ADS Investco, LLC, will also have the right to require us to use our reasonable best efforts to include in such registration statement shares of our common stock held by them, subject to certain limitations, including as determined by the underwriters. The Registration Rights Agreement will also provide for us to indemnify certain of our stockholders and their affiliates in connection with the registration of our common stock.

Indemnification agreements

We have entered into indemnification agreements with our directors and senior officers. The indemnification agreements will provide the directors and senior officers with contractual rights to the indemnification and expense advancement rights provided under our amended and restated bylaws, as well as contractual rights to additional indemnification as provided in the indemnification agreements. See “Description of Capital Stock — Limitations on Liability and Indemnification.”

Transactions with Other Related Parties

In connection with our business, we procure services from thousands of suppliers, some of which may be affiliated with American Securities. We estimate that we purchased services from a consulting firm deriving a meaningful percentage of its business from its work for American Securities and its affiliates for approximately $99,391 for the fiscal year ended March 31, 2013 and $86,268 for the fiscal year ended March 31, 2014. Management believes such services were purchased on an arm’s length basis at prices that an unrelated third party would pay.

Policies and procedures for related party transactions

Our board of directors will adopt a written related person transaction policy to be effective upon completion of this offering to set forth the policies and procedures for the review and approval or ratification of related person transactions. This policy will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships in which we were or are to be a participant, the amount involved exceeds $120,000, and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness, and employment by us of a related person. We anticipate that our full board of directors will review related party transactions.

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DESCRIPTION OF EMPLOYEE STOCK OWNERSHIP PLAN

We sponsor a tax-qualified employee stock ownership plan, or ESOP, that covers our employees who meet certain service requirements. The ESOP was established effective April 1, 1993, and was originally funded with a 30-year term loan from us as well as shares of our convertible preferred stock through a transfer of assets from our profit sharing retirement plan. The loan is secured by a pledge of unallocated convertible preferred stock, purchased by the ESOP in 1993 with loan proceeds, that has not yet been released from the pledge and allocated to ESOP accounts. The ESOP operates as a leveraged ESOP and was designed to enable eligible employees to acquire stock ownership interests in their accounts under the ESOP.

We make annual contributions to the ESOP, which, when aggregated with the ESOP’s dividends and investment earnings, equal at least the amount necessary to enable the ESOP to make its regularly scheduled payments of principal and interest due on its term loan to us. As the ESOP makes annual payments of principal and interest on the term loan to us,

•

Convertible preferred stock is released from the ESOP’s unallocated loan suspense account and allocated to eligible employees’ ESOP accounts in accordance with the ESOP’s plan terms and applicable regulations under the U.S. Internal Revenue Code of 1986, as amended, or the Code; and

•

We recognize a non-cash compensation expense equal to the fair value of the allocated shares determined by the ESOP’s independent appraiser. A portion of the expense is allocated to cost of goods sold and a portion is allocated to selling and administrative expense, based on the number of shares allocated to the accounts of manufacturing employees and other employees. Subject to limitations under the Code, annual allocations are made among participants in the ratio that the compensation of each participant in the year bears to the total compensation of all participants.

Required dividends on allocated shares are paid in cash (i.e., passed through) to the participants, and required dividends on unallocated shares in the ESOP’s loan suspense account are paid in cash to, and retained by, the ESOP and allocated among the participants’ ESOP cash accounts (unless, in the ESOP committee’s discretion, such dividends are used to service the ESOP’s debt on the term loan. Pursuant to the direction of the ESOP committee, the January 15, 2014 special dividend on the ESOP’s allocated shares was paid in cash (i.e., passed through) to participants, and the special dividend on the ESOP’s unallocated shares was retained by the ESOP and allocated among the participants’ ESOP cash accounts.

In general, the trustee of the ESOP votes the shares of stock held by the ESOP as directed by the ESOP’s committee. However, in the event of either a corporate matter with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all of the assets of a trade or business or with respect to any tender or exchange offer, or a request or invitation for tenders or exchanges, each participant in the ESOP may direct the trustee of the ESOP on how to vote the shares of stock allocated to the participant’s ESOP accounts; and the trustee must vote any unallocated stock and allocated stock for which no participant instructions were received in the same proportion as the allocated stock for which participants’ voting instructions have been received is voted.

Upon distributions from the ESOP resulting from retirement, disability, death or vested terminations, a participant or designated beneficiary may elect to receive the vested amount credited to his or her ESOP account in the form of cash or our common stock, with any fractional shares paid in cash. We have been obligated by the Code and the terms of the ESOP to repurchase shares of common stock received by participants or designated beneficiaries in the event they exercise their put option rights relating to such shares. Such put option rights will terminate upon completion of this offering and the creation of a public market for our common stock. For fiscal years 2012, 2013 and 2014, we had repurchase obligations with respect to 87,829, 59,318 and 82,406 shares of convertible preferred stock, respectively, with common stock equivalents of 67,558, 45,627 and 63,387 shares, respectively.

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Participants in the ESOP who attain age 50 and have seven years of participation in the ESOP may elect to diversify between 25% and 50% of the shares of convertible preferred stock allocated to their ESOP accounts while still employed by us. Although we have had a financial obligation to liquidate such diversified shares, upon completion of this offering such diversified shares of convertible preferred stock will be convertible by the ESOP trustee into shares of our common stock and sold, thereby eliminating our financial obligations with respect to diversification. For fiscal years 2012, 2013 and 2014, the diversified shares of convertible preferred stock were 2,670, 6,077 and 5,968 shares, respectively, with common stock equivalents of 2,053, 4,675 and 4,590 shares, respectively.

Upon completion of the offering made by this prospectus, we will continue to make annual contributions to the ESOP as described above and recognize non-cash compensation expenses each year. We disregard the ESOP compensation expense in calculating Adjusted EBITDA, because it is a non-cash charge. The ESOP compensation expense is recognized each year when shares are allocated to participants’ accounts, but it is not ongoing share-based compensation. We believe our employees receive competitive compensation excluding the shares allocated to them under the ESOP.

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DESCRIPTION OF CAPITAL STOCK

General

Upon the closing of this offering, our authorized capital stock will consist of shares of common stock, par value $0.01 per share, shares of undesignated preferred stock, par value $0.01 per share and shares of 2.50% Cumulative Convertible Voting Preferred Stock, par value $0.01 per share, or convertible preferred stock, which funds our ESOP as described above under “Description of Employee Stock Ownership Plan.” Upon the closing of this offering there will be shares of our common stock issued and outstanding not including shares of our common stock issuable upon exercise of outstanding stock options and shares of common stock reserved for issuance upon conversion of our convertible preferred stock.

In connection with this offering, we will amend and restate our certificate of incorporation and bylaws. The following descriptions of our capital stock, amended and restated certificate of incorporation and amended and restated bylaws are intended as summaries only and are qualified in their entirety by reference to our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective upon the completion of this offering and which are filed as exhibits to the registration statement, of which this prospectus forms a part, and to the applicable provisions of the Delaware General Corporation Law.

Common Stock

Holders of common stock will be entitled:

•

to cast one vote for each share held of record on all matters submitted to a vote of the stockholders;

•

to receive, on a pro rata basis, dividends and distributions, if any, that our board of directors may declare out of legally available funds, subject to preferences that may be applicable to preferred stock, if any, then outstanding; and

•

upon our liquidation, dissolution or winding up, to share equally and ratably in any assets remaining after the payment of all debt and other liabilities, subject to the prior rights, if any, of holders of any outstanding shares of preferred stock.

Any dividends declared on the common stock will not be cumulative. Our ability to pay dividends on our common stock is subject to the restrictions set forth in the Credit Facilities. See “Dividend Policy.”

The holders of our common stock will not have any preemptive, cumulative voting, subscription, conversion, redemption or sinking fund rights. The common stock will not be subject to future calls or assessments by us. The rights and privileges of holders of our common stock are subject to any series of preferred stock that we may issue in the future, as described below.

Before the date of this prospectus, there has been no public market for our common stock.

As of March 31, 2014, we had shares of common stock outstanding and holders of record of our common stock.

Preferred Stock

General

Upon completion of this offering, under our amended and restated certificate of incorporation, our board of directors will have the authority, without further action by our stockholders, except as described below, to issue up to shares of preferred stock in one or more series and to fix the voting powers, designations, preferences and the relative participating, optional or other special rights and the qualifications, limitations and restrictions of each series, including dividend rights, conversion rights, voting rights, terms of redemption,

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liquidation preferences and the number of shares constituting any series. Upon completion of the offering, no shares of our authorized preferred stock will be outstanding except for our convertible preferred stock. Because our board of directors will have the power to establish the preferences and rights of the shares of any additional series of preferred stock, it may afford holders of any preferred stock preferences, powers and rights, including voting and dividend rights, senior to the rights of holders of the common stock, which could adversely affect the holders of the common stock and could delay, discourage or prevent a takeover of us even if a change of control of us would be beneficial to the interests of our stockholders.

Convertible Preferred Stock

In connection with the establishment of our ESOP in 1993, we sold 469,200 shares of convertible preferred stock to the ESOP for approximately $34.5 million, which shares were subsequently adjusted pursuant to a 20-for-1 stock split in 2006. In establishing the ESOP, $5.0 million was transferred from our tax-qualified profit sharing retirement plan to the ESOP, which the ESOP used to purchase $5.0 million of our convertible preferred stock. We extended a term loan to the ESOP for approximately $29.5 million to purchase the balance of the convertible preferred stock, which term loan is secured by a pledge of the convertible preferred stock purchased by the ESOP with such loan proceeds.

We are obligated to make payments to the ESOP in order for the ESOP to make annual payments of principal and interest due under the term loan and to fund diversification elections of participants who are eligible to diversify shares of convertible preferred stock allocated to their ESOP accounts. As payments on the term loan are made, shares of convertible preferred stock are released from the ESOP’s unallocated loan suspense account and allocated to eligible employees’ accounts. Such allocation is made as of the last day of each plan year (i.e., as of each March 31) and is made on a pro rata basis, based on the compensation paid to each of the eligible employees for such year up to the maximum per employee annual allocation limits imposed by the Code. All shares of convertible preferred stock not so released and allocated continue to be unallocated under the ESOP.

The shares of convertible preferred stock will be held in the name of the ESOP trustee until redemption or conversion. In the event of any transfer of shares of the convertible preferred stock to any person other than the ESOP trustee, the shares so transferred, upon such transfer, will be automatically converted into shares of Common Stock.

Each share of convertible preferred stock (after effecting the -for- stock split to be effected immediately prior to the effectiveness of the registration statement of which this prospectus forms a part) has an applicable value of $ ; bears an annual cumulative dividend of 2.5% or $ per share; is convertible into 0.7692 shares of Common Stock, subject to adjustment in certain circumstances; has a liquidation preference of $ , plus any accrued and unpaid dividends; and generally votes together as a single class with the Common Stock on matters upon which the Common Stock is entitled to vote except as otherwise required by the laws of the State of Delaware. If full cumulative dividends on the convertible preferred stock have not been declared and paid or set apart for payment when due, we (i) may pay only ratable dividends (in proportion to the full amounts to which holders of convertible preferred stock would otherwise be entitled) on the convertible preferred stock and (ii) may not pay dividends, or make any other distribution, repurchases, redemption or retirements on the Common Stock or any other class of stock ranking junior to the convertible preferred stock.

In addition to the cumulative dividends payable with respect to the outstanding shares of convertible preferred stock, if dividends are declared by our board of directors on Common Stock, the holders of convertible preferred stock are entitled to receive dividends in such amount as they would be entitled to receive if their shares of convertible preferred stock had been converted into shares of Common Stock on the applicable record date.

The shares of convertible preferred stock are not redeemable at our option. At the option of the holder, who is the trustee of the ESOP, at any time and from time to time, we must redeem the shares of convertible preferred stock for cash at a redemption price equal to the greater of (i) the fair market value of the convertible preferred stock or (ii) $ per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares), plus accumulated and unpaid dividends to

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the date fixed for redemption, upon notice to us given not less than five business days prior to the date fixed by the holder in such notice for such redemption, upon certification by such holder to us when and to the extent necessary for such holder to provide for distributions required to be made to participants under our ESOP, or any successor plan.

Anti-Takeover Effects of our Certificate of Incorporation and Bylaws

The provisions of our amended and restated certificate of incorporation and amended and restated bylaws and of the Delaware General Corporation Law summarized below may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that you might consider in your best interest, including an attempt that might result in your receipt of a premium over the market price for your shares. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which could result in an improvement of their terms.

Undesignated preferred stock . As discussed above, our board of directors has the ability to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or changes to our management.

Classified board of directors . Our board of directors is divided into three classes, as nearly equal in number as possible, with members of each class serving staggered three-year terms. Our amended and restated certificate of incorporation will provide that the authorized number of directors may be changed only by resolution of our board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. Our amended and restated certificate of incorporation will also provide that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office. Our classified board of directors could have the effect of delaying or discouraging an acquisition of us or a change in our management.

Special meetings of stockholders . Our amended and restated certificate of incorporation will provide that a special meeting of stockholders may be called only by or at the direction of our board of directors pursuant to a resolution adopted by a majority of our board of directors. Stockholders will not be permitted to call a special meeting.

No stockholder action by written consent . Our amended and restated certificate of incorporation will provide that stockholder action may be taken only at an annual meeting or special meeting of stockholders and may not be taken by written consent in lieu of a meeting.

Removal of directors . Our amended and restated certificate of incorporation and amended and restated bylaws will provide that directors may be removed from office only for cause and only upon the affirmative vote of holders of at least 75% of the votes which all the stockholders would be entitled to cast.

No cumulative voting . Our amended and restated certificate of incorporation and amended and restated bylaws do not permit cumulative voting in the election of directors. Cumulative voting allows a stockholder to

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vote a portion or all of its shares for one or more candidates for seats on our board of directors. Without cumulative voting, a minority stockholder may not be able to gain as many seats on our board of directors as the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board’s decision regarding a takeover.

Stockholder advance notice procedure. Our amended and restated bylaws will establish an advance notice procedure for stockholders to make nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders. The amended and restated bylaws will provide that any stockholder wishing to nominate persons for election as directors at, or bring other business before, an annual meeting must deliver to our Secretary a written notice of the stockholder’s intention to do so. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. To be timely, the stockholder’s notice must be delivered to our corporate Secretary at our principal executive offices not fewer than 90 days nor more than 120 days before the first anniversary date of the annual meeting for the preceding year; provided, however, that in the event that the annual meeting is set for a date that is more than 30 days before or more than 70 days after the first anniversary date of the preceding year’s annual meeting, a stockholder’s notice must be delivered to our Secretary (x) not earlier than 120 days prior to the meeting or (y) no later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which a public announcement of the date of the such meeting is first made by us.

Super-majority vote requirement. Our amended and restated certificate of incorporation will require a super-majority stockholders vote of 75% to approve any reorganization, recapitalization, share exchange, share reclassification, consolidation, merger, conversion or sale of all or substantially all assets to which we are a party that is not approved by the affirmative vote of at least 75% of the members of our board of directors.

Amendments to certificate of incorporation and bylaws. The DGCL generally provides that the affirmative vote of a majority of the outstanding stock entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless either a corporation’s certificate of incorporation or bylaws require a greater percentage. Our amended and restated certificate of incorporation will provide that specified provisions of our amended and restated certificate of incorporation may not be amended, altered or repealed unless the amendment is approved by the affirmative vote of the holders of at least 75% of the outstanding shares of our capital stock then entitled to vote at any annual or special meeting of stockholders, including the provisions governing the liability and indemnification of directors, the elimination of stockholder action by written consent and the prohibition on the rights of stockholders to call a special meeting.

In addition, our amended and restated certificate of incorporation and amended and restated bylaws will provide that our amended and restated bylaws may be amended, altered or repealed, or new bylaws may be adopted, by the affirmative vote of a majority of the members of our board of directors, or by the affirmative vote of the holders of at least 75% of the outstanding shares of our capital stock then entitled to vote at any annual or special meeting of stockholders.

These provisions make it more difficult for any person to remove or amend any provisions in our amended and restated certificate of incorporation and amended and restated bylaws that may have an anti-takeover effect.

Section 203 of the DGCL. In our amended and restated certificate of incorporation, we will elect not to be governed by Section 203 of the DGCL, as permitted under and pursuant to subsection (b)(3) of Section 203. Section 203, with specified exceptions, prohibits a Delaware corporation from engaging in any “business combination” with any “interested stockholder” for a period of three years following the time that the stockholder became an interested stockholder unless:

•

prior to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

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•

upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

•

at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 defines “business combination” to include the following:

•

any merger or consolidation of the corporation with the interested stockholder;

•

any sale, lease, exchange, mortgage, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

•

subject to specified exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

•

any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

•

any receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

An “interested stockholder” is any entity or person who, together with affiliates and associates, owns, or within the previous three years owned, 15% or more of the outstanding voting stock of the corporation.

Limitations on Liability and Indemnification

Our amended and restated certificate of incorporation will contain provisions permitted under Delaware General Corporation Law relating to the liability of directors. These provisions will eliminate a director’s personal liability to the fullest extent permitted by the Delaware General Corporation Law for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving:

•

any breach of the director’s duty of loyalty;

•

acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;

•

under Section 174 of the Delaware General Corporation Law (unlawful dividends); or

•

any transaction from which the director derives an improper personal benefit.

The principal effect of the limitation on liability provision is that a stockholder will be unable to prosecute an action for monetary damages against a director unless the stockholder can demonstrate a basis for liability for which indemnification is not available under the Delaware General Corporation Law. These provisions, however, should not limit or eliminate our rights or any stockholder’s rights to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of director’s fiduciary duty. These provisions will not alter a director’s liability under federal securities laws. The inclusion of this provision in our amended and restated certificate of incorporation may discourage or deter stockholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our stockholders.

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Our amended and restated bylaws will require us to indemnify and advance expenses to our directors and officers to the fullest extent permitted by the Delaware General Corporation Law and other applicable law, except in certain cases of a proceeding instituted by the director or officer without the approval of our board of directors. Our amended and restated bylaws will provide that we are required to indemnify our directors and officers, to the fullest extent permitted by law, for all judgments, fines, settlements, legal fees and other expenses incurred in connection with pending or threatened legal proceedings because of the director’s or officer’s positions with us or another entity that the director or officer serves at our request, subject to various conditions, and to advance funds to our directors and officers to enable them to defend against such proceedings.

Choice of Forum

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the Delaware General Corporation Law, the amended and restated certificate of incorporation and the amended and restated bylaws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. It is possible that a court could rule that this provision is not applicable or is unenforceable. We may consent in writing to alternative forums. Stockholders will be deemed to have notice of and consented to this provision of our amended and restated certificate of incorporation.

Market Listing

We have applied to list our common stock on the NYSE under the symbol “WMS.”

Transfer Agent and Registrar

Upon the completion of this offering, the transfer agent and registrar for our common stock will be Computershare Trust Company, N.A.

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SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE

Immediately prior to this offering, there was no public market for our common stock. Some shares of our common stock will not be available for sale for a certain period of time after this offering because they are subject to contractual and legal restrictions on resale, some of which are described below. Sales of substantial amounts of common stock in the public market after these restrictions lapse, or the perception that these sales could occur, could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Sales of Restricted Securities

After this offering, shares of our common stock will be outstanding. Of these shares, all of the shares sold in this offering will be freely tradable without restriction under the Securities Act, unless purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining shares of our common stock that will be outstanding after this offering are “restricted securities” within the meaning of Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration. Subject to the lock-up agreements described below, shares held by our affiliates that are not restricted securities or that have been owned for more than one year may be sold subject to compliance with Rule 144 of the Securities Act without regard to the prescribed one-year holding period under Rule 144.

Lock-up Agreements

All of our directors and executive officers and the holders of more than % of our common stock prior to this offering have signed lock-up agreements under which they have agreed not to sell, transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock without the prior written consent of the representatives of the underwriters for a period of 180 days, subject to certain exceptions and possible extension under certain circumstances, after the date of this prospectus. These agreements are described below under “Underwriting.”

Rule 144

In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who is not our affiliate and has not been our affiliate at any time during the preceding three months will be entitled to sell any shares of our common stock that such person has beneficially owned for at least six months, including the holding period of any prior owner other than one of our affiliates, without regard to volume limitations. Sales of our common stock by any such person would be subject to the availability of current public information about us if the shares to be sold were beneficially owned by such person for less than one year.

In addition, under Rule 144, a person may sell shares of our common stock immediately upon the closing of this offering, without regard to volume limitations or the availability of public information about us, if:

•

the person is not our affiliate and has not been our affiliate at any time during the preceding three months; and

•

the person has beneficially owned the shares to be sold for at least one year, including the holding period of any prior owner other than one of our affiliates.

Beginning 90 days after the date of this prospectus, and subject to the lock up agreements described above, our affiliates who have beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

•

1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after this offering; and

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•

the average weekly trading volume in our common stock on the NYSE during the four calendar weeks preceding the date of filing of a Notice of Proposed Sale of Securities Pursuant to Rule 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements.

Rule 701

Any of our employees, officers or directors who acquired shares under a written compensatory plan or contract may be entitled to sell them in reliance on Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell these shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation or notice provisions of Rule 144. All holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling those shares. However, all shares issued under Rule 701 are subject to lock-up agreements and will only become eligible for sale when the 180-day lock-up agreements expire.

Equity Incentive Plans

Prior to completion of this offering, we had three employee share-based incentive plans, our 2000 Stock Option Plan, our 2008 Restricted Stock Plan and our 2013 Stock Option Plan. We expect to adopt one or more new plans, prior to the completion of this offering, to enable us to better align our compensation programs with those typical of companies with publicly-traded securities.

As of March 31, 2014, we had outstanding approximately 600,005 options to purchase shares of common stock, of which approximately 103,191 options to purchase shares of common stock were vested. Following this offering, we intend to file one or more registration statements on Form S-8 under the Securities Act to register all of the shares of common stock issuable upon exercise of outstanding options as well as all shares of our common stock reserved for future issuance under our equity plans. See “Executive Compensation — Equity-Based Incentive Plans” for additional information regarding these plans. Shares of our common stock issued under the S-8 registration statement will be available for sale in the public market, subject to the Rule 144 provisions applicable to affiliates, and subject to any vesting restrictions and lock-up agreements applicable to these shares.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

General

Our senior funded indebtedness consists of secured Senior Loan Facilities (as defined below) and secured Senior Notes (as defined below).

Senior Loan Facilities

Our bank credit facilities consist of: (i) a secured revolving credit facility (which we refer to as the Revolving Credit Facility), providing for revolving loans and letters of credit of up to a maximum aggregate principal amount of $325.0 million and (ii) a secured term loan facility (which we refer to as the Term Loan Facility and, together with the Revolving Credit Facility, as the Senior Loan Facilities), providing for term loans, which we refer to as the Term Loans, in an aggregate original principal amount of $100.0 million. A portion of the Revolving Credit Facility is available for letters of credit ($15.0 million sublimit) and swing line loans ($20.0 million sublimit).

The Senior Loan Facilities also permit us to add one or more revolving credit facility commitments to be included in the Revolving Credit Facility, to increase the existing revolving credit facility commitments by requesting supplemental revolving credit facility commitments, to add one or more incremental term loan facilities to be included in the Term Loan Facility, or to increase the existing term loans by requesting supplemental term loan commitments. Such additional commitments to the Revolving Credit Facility or the Term Loan Facility shall not exceed $50.0 million in the aggregate.

The proceeds of the Revolving Credit Facility are primarily used to provide for our ongoing working capital and capital expenditure needs, to finance acquisitions and distributions, and for our other general corporate purposes. The proceeds of the Term Loans were primarily used for our general corporate purposes.

As of March 31, 2014, the outstanding principal drawn on the Revolving Credit Facility was $248.1 million, with $68.4 million available to be drawn under all outstanding letters of credit issued under the Revolving Credit Facility. As of March 31, 2014, the outstanding principal balance of the Term Loans was $97.5 million.

Maturity; Prepayment

The advances under the Revolving Credit Facility and the Term Loans may be prepaid at our option at any time without premium or penalty (other than customary payments related to increased costs, LIBOR breakage and indemnities). Subject to certain exceptions, the Senior Loan Facilities will be subject to mandatory prepayment in an amount equal to a portion of the net cash proceeds received by us or any other Loan Party from certain asset sales, insurance recovery events, debt incurrences and equity issuances. Further, the Revolving Credit Facility will be subject to mandatory prepayment if the outstanding Revolving Credit Facility exceeds the aggregate commitments with respect thereto, in an amount equal to such excess. Mandatory prepayments of outstanding obligations under the Revolving Credit Facility will not result in a permanent reduction of the lenders’ commitments under the Revolving Credit Facility.

The Senior Loan Facilities will mature on June 12, 2018, which we refer to as the Maturity Date. The Term Loans are payable in nineteen consecutive quarterly installments of principal as follows: (i) four quarterly principal payments, each in the amount of $1,250,000, on October 1, 2013, January 1, 2014, April 1, 2014 and July 1, 2014; (ii) four quarterly principal payments, each in the amount of $1,875,000, on October 1, 2014, January 1, 2015, April 1, 2015 and July 1, 2015; (iii) eleven quarterly principal payments, each in the amount of $2,500,000, commencing on October 1, 2015 and continuing on the first day of January, April, July and October thereafter through and including April 1, 2018, with all remaining principal on the Term Loans due and payable on the Maturity Date.

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Guarantee; Security

Our obligations under the Senior Loan Facilities are guaranteed by our existing and subsequently acquired or organized direct or indirect domestic material subsidiaries, which we refer to as Subsidiary Guarantors, to the extent permitted by applicable law, regulation and contractual provision.

The obligations under the Senior Loan Facilities are secured by: (i) all capital stock of all first-tier domestic subsidiaries owned by ADS and the Subsidiary Guarantors and 65% of the capital stock of any first-tier foreign subsidiary owned directly by ADS or any Subsidiary Guarantor (with any domestic subsidiary whose principal purpose is to hold the ownership interests of one or more foreign subsidiaries generally being deemed to be a foreign subsidiary) and (ii) substantially all other tangible and intangible personal property owned by ADS and each Subsidiary Guarantor, in each case to the extent permitted by applicable law. Pursuant to the Intercreditor and Collateral Agency Agreement (defined below), our obligations under the Senior Loan Facilities are secured by the collateral on a pari passu basis with our obligations under the Senior Notes (as defined below) to the extent set forth in the Intercreditor and Collateral Agency Agreement.

Interest; Fees

The interest rates applicable to the loans under the Senior Loan Facilities are based on a fluctuating rate of interest measured by reference to either, at our option: (i) an adjusted London inter-bank offered rate (adjusted for statutory reserve requirements), plus a borrowing margin determined on a quarterly basis by reference to a pricing grid corresponding to our then applicable Leverage Ratio or (ii) an alternate base rate, plus a borrowing margin determined on a quarterly basis by reference to a pricing grid corresponding to our then applicable Leverage Ratio.

Customary fees are payable in respect of the Senior Loan Facilities and the ongoing utilization and maintenance thereof.

Covenants

The Senior Loan Facilities contain a number of negative covenants that, among other things, limit or restrict our ability and, in certain cases, certain of our subsidiaries’ ability to carry out acquisitions, mergers or consolidations; to pay dividends; to incur other indebtedness (including guarantees of other indebtedness); to grant or permit certain liens; to pay dividends or make other restricted payments, including investments; to prepay or amend the terms of other indebtedness; to enter into certain types of transactions with affiliates; to sell certain assets; or to sell or otherwise dispose of all or substantially all of its assets.

The Senior Loan Facilities also contain certain affirmative covenants, including financial and other reporting requirements.

Events of Default

The Senior Loan Facilities provide for customary events of default, including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of representations or warranties, specified cross default and cross acceleration to other material indebtedness, change of control, certain bankruptcy events, certain ERISA events, material invalidity of guarantees or security interests and material judgments.

Senior Notes

On September 27, 2010, we issued $75.0 million aggregate principal amount of 5.60% Senior Series A Secured Notes due September 24, 2018 (which we refer to as the Senior Series A Notes) at par. Each of the Senior Series A Notes bears interest at a rate of 5.6% per annum. Accrued interest on each of the Senior Series A Notes is payable quarterly on each December 24, March 24, June 24 and September 24. Principal on each of the Senior Series A Notes is payable in three (3) equal installments on September 24, 2016, September 24, 2017 and September 24, 2018.

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On July 24, 2013, we issued $25.0 million aggregate principal amount of 4.05% Senior Series B Secured Notes due September 24, 2019 (which we refer to as the Senior Series B Notes and, together with the Senior Series A Notes, as the Senior Notes) at par. Each of the Senior Series B Notes bears interest at a rate of 4.05% per annum. Accrued interest on each of the Senior Series B Notes is payable quarterly on each December 24, March 24, June 24 and September 24. Principal on each of the Senior Series B Notes is payable on September 24, 2019.

The proceeds of the Senior Series A Notes were primarily used to repurchase outstanding shares of common stock from certain of our stockholders and to repurchase outstanding shares of convertible preferred stock from the ESOP. The proceeds of the Senior Series B Notes were primarily used for our general corporate purposes.

As of March 31, 2014, the outstanding principal balance of the Senior Series A Notes was $75.0 million. As of March 31, 2014, the outstanding principal balance of the Senior Series B Notes was $25.0 million.

As of March 31, 2014, our calculated leverage exceeded 3 to 1. As a result, we were subject to the additional 200 basis point excess leverage fee, which increased interest expense by $500 in fiscal year 2014. We expect the leverage fee to continue no later than when we receive the proceeds from the IPO and reduce our outstanding debt, which will reduce our calculated leverage below 3 to 1.

Guarantees; Security

Consistent with the Senior Loan Facilities, the Senior Notes are guaranteed by the Subsidiary Guarantors, to the extent permitted by applicable law and regulation.

Our obligations under the Senior Notes are secured by: (i) all capital stock of all domestic subsidiaries owned by ADS and the Subsidiary Guarantors and 65% of the capital stock of any first-tier foreign subsidiary owned directly by ADS or any Subsidiary Guarantor (with any domestic subsidiary created to hold the stock of foreign subsidiary generally being deemed to be a foreign subsidiary) and (ii) substantially all other tangible and intangible personal property owned by ADS and each Subsidiary Guarantor, in each case to the extent permitted by applicable law. Pursuant to the Intercreditor and Collateral Agency Agreement, our obligations under the Senior Notes are secured by the collateral on a pari passu basis with our obligations under the Senior Loan Facilities to the extent set forth in the Intercreditor and Collateral Agency Agreement.

Prepayments

The Senior Notes of each series are subject to prepayment at our option, in whole at any time or from time to time in part at 100% of the principal amount so prepaid plus interest thereon to the prepayment date plus a yield maintenance amount with respect to such note.

Subject to certain exceptions, if we or any of the Subsidiary Guarantors receives net cash proceeds from certain asset sales, insurance recovery events, debt incurrences or equity issuances, we must use a portion of such net cash proceeds to make an offer to prepay the Senior Notes. A noteholder may accept or reject such offer of prepayment.

Covenants

Consistent with the terms of the Senior Loan Facilities, the Senior Notes contain restrictive covenants that, among other things, limit the ability of ADS and, in certain cases, certain of our subsidiaries, to: incur more indebtedness; pay dividends, redeem stock or make other distributions; make investments; grant or permit certain liens; transfer or sell assets; merge or consolidate; and enter into certain transactions with ADS’s affiliates.

Consistent with the terms of the Senior Loan Facilities, the Senior Notes also contain certain affirmative covenants, including financial and other reporting requirements.

Events of Default

Consistent with the terms of the Senior Loan Facilities, the Senior Notes provide for customary events of default, including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of

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representations or warranties, specified cross default and cross acceleration to other material indebtedness, change of control, certain bankruptcy events, certain ERISA events, material invalidity of guarantees or security interests and material judgments.

Mexicana Revolving Credit Facility

The credit facility for our joint venture ADS Mexicana consists of a secured revolving credit facility (which we refer to as the Mexicana Revolving Credit Facility), providing for revolving loans and letters of credit of up to a maximum aggregate principal amount of $12.0 million. A portion of the Mexicana Revolving Credit Facility is available for letters of credit ($1.0 million sublimit).

The proceeds of the Mexicana Revolving Credit Facility are primarily used to provide for ongoing working capital and capital expenditure needs and for other general corporate purposes.

As of March 31, 2014, there was no outstanding principal drawn on the Mexicana Revolving Credit Facility and the entire $12 million was available to be drawn.

Maturity; Prepayment

The advances under the Mexicana Revolving Credit Facility may be prepaid at the option of ADS Mexicana at any time without premium or penalty (other than customary payments related to increased costs, LIBOR breakage and indemnities). The Mexicana Revolving Credit Facility will be subject to mandatory prepayment if the outstanding Mexicana Revolving Credit Facility exceeds the aggregate commitments with respect thereto, in an amount equal to such excess. The Mexicana Revolving Credit Facility will mature on June 12, 2018.

Guarantee; Security

The obligations under the Mexicana Revolving Credit Facility are guaranteed by ADS and our existing and subsequently acquired or organized direct or indirect domestic material subsidiaries, which we refer to as Mexicana Subsidiary Guarantors, to the extent permitted by applicable law, regulation and contractual provision.

The obligations under the Mexicana Revolving Credit Facility are secured by: (i) all capital stock of all first-tier domestic subsidiaries owned by ADS and the Mexicana Subsidiary Guarantors and 65% of the capital stock of any first-tier foreign subsidiary owned directly by ADS or any Mexicana Subsidiary Guarantor (with any domestic subsidiary whose principal purpose is to hold the ownership interests of one or more foreign subsidiaries generally being deemed to be a foreign subsidiary) and (ii) substantially all other tangible and intangible personal property owned by ADS and each Mexicana Subsidiary Guarantor, in each case to the extent permitted by applicable law. Pursuant to the Intercreditor and Collateral Agency Agreement (defined below), the obligations under the Mexicana Revolving Credit Facility are secured by the collateral on a pari passu basis with the obligations under the Senior Notes (as defined above) and the Senior Loan Facilities (as defined above) to the extent set forth in the Intercreditor and Collateral Agency Agreement.

Interest; Fees

The interest rates applicable to the loans under the Mexicana Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to either, at the option of ADS Mexicana: (i) an adjusted London inter-bank offered rate (adjusted for statutory reserve requirements), plus a borrowing margin determined on a quarterly basis by reference to a pricing grid corresponding to our then applicable Leverage Ratio or (ii) an alternate base rate, plus a borrowing margin determined on a quarterly basis by reference to a pricing grid corresponding to our then applicable Leverage Ratio.

Customary fees are payable in respect of the Mexicana Revolving Credit Facility and the ongoing utilization and maintenance thereof.

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Covenants

The Mexicana Revolving Credit Facility contains a number of negative covenants that, among other things, limit or restrict ADS Mexicana’s ability and, in certain cases, ADS Corporativo, S.A. de C.V.’s ability to carry out acquisitions, mergers or consolidations; to incur other indebtedness (including guarantees of other indebtedness); to grant or permit certain liens; to pay dividends or make other restricted payments, including investments; to enter into certain types of transactions with affiliates; to sell certain assets; or to sell or otherwise dispose of all or substantially all of its assets.

The Mexicana Revolving Credit Facility also contains certain affirmative covenants, including financial and other reporting requirements.

Events of Default

The Mexicana Revolving Credit Facility provides for customary events of default, including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of representations or warranties, specified cross default and cross acceleration to other material indebtedness, change of control, certain bankruptcy events, expiration or termination of the Senior Loan Facilities, material invalidity of guarantees or security interests and material judgments.

Intercreditor Agreement

On June 12, 2013, the administrative agent for and on behalf of the lenders under the Senior Loan Facilities and the holders of the Senior Notes, among others entered into an intercreditor and collateral agency agreement, which we refer to as the Intercreditor and Collateral Agency Agreement. Pursuant to the Intercreditor and Collateral Agency Agreement, the administrative agent was appointed as the collateral agent (which we refer to as the Collateral Agent) and secured party for the benefit of, among others, the lenders under the Senior Loan Facilities and the holders of the Senior Notes and the parties agreed that our obligations under the Senior Loan Facilities and the Senior Notes are secured by the collateral on a pari passu basis to the extent provided in the Intercreditor and Collateral Agency Agreement.

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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

The following is a discussion of certain material U.S. federal income and estate tax considerations relating to the purchase, ownership and disposition of our common stock by Non-U.S. Holders (as defined below) that purchase our common stock pursuant to this offering and hold such common stock as a “capital asset” within the meaning of Section 1221 of the Code. This discussion is based on the Code, U.S. Treasury regulations promulgated or proposed thereunder, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or to different interpretation. This discussion does not address all of the U.S. federal income tax considerations that may be relevant to specific Non-U.S. Holders in light of their particular circumstances, including the impact of the unearned income Medicare contribution tax, or to Non-U.S. Holders subject to special treatment under U.S. federal income tax law (such as banks, insurance companies, dealers in securities or other Non-U.S. Holders that generally mark their securities to market for U.S. federal income tax purposes, controlled foreign corporations, passive foreign investment companies, foreign governments, international organizations, tax-exempt entities, certain former citizens or residents of the United States, or Non-U.S. Holders that hold our common stock as part of a straddle, hedge, conversion or other integrated transaction). This discussion does not address any U.S. state or local or non-U.S. tax considerations or any U.S. federal gift or alternative minimum tax considerations.

As used in this discussion, the term “Non-U.S. Holder” means a beneficial owner of our common stock that, for U.S. federal income tax purposes, is:

•

an individual who is neither a citizen nor a resident of the United States;

•

a corporation that is not created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

•

an estate that is not subject to U.S. federal income tax on income from non-U.S. sources which is not effectively connected with the conduct of a trade or business within the United States; or

•

a trust unless (i) it is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all of its substantial decisions or (ii) it has in effect a valid election under applicable U.S. Treasury regulations to be treated as a United States person.

If an entity treated as a partnership for U.S. federal income tax purposes invests in our common stock, the U.S. federal income tax considerations relating to such investment will depend in part upon the status and activities of such entity and the particular partner. Any such entity should consult its own tax adviser regarding the U.S. federal tax considerations applicable to it and its partners relating to the purchase, ownership and disposition of our common stock.

PERSONS CONSIDERING AN INVESTMENT IN OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.

Distributions on Common Stock

If we make a distribution of cash or other property (other than certain pro rata distributions of our common stock or rights to acquire our common stock) in respect of a share of our common stock, the distribution will generally be treated as a dividend to the extent it is paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess generally will be treated first as a tax-free return of capital to the extent of the Non-U.S. Holder’s tax basis in such share of our common stock, and then as capital gain.

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Except as described below, dividends paid to or for the account of a Non-U.S. Holder are subject to withholding of U.S. federal income tax at a 30% rate, or at a lower rate if provided by an applicable tax treaty and the Non-U.S. Holder has furnished to us or another payor:

•

a valid IRS Form W-8BEN or an acceptable substitute form upon certifying, under penalties of perjury, the status of the Non-U.S. Holder as (or, in the case of a Non-U.S. Holder that is a partnership or an estate or trust, such forms certifying the status of each partner in the partnership or beneficiary of the estate or trust as) a non-U.S. person and the Non-U.S. Holder’s entitlement to the lower treaty rate with respect to such payments, or

•

in the case of payments made outside the United States to an offshore account (generally, an account maintained at an office or branch of a bank or other financial institution at any location outside the United States), other documentary evidence establishing the entitlement of the Non-U.S. Holder to the lower treaty rate in accordance with U.S. Treasury regulations.

If a Non-U.S. Holder is eligible for a reduced rate of U.S. withholding tax under a tax treaty, such Non-U.S. Holder may obtain a refund of any amounts withheld in excess of that rate by filing a refund claim with the IRS.

If dividends paid to a Non-U.S. Holder are “effectively connected” with the conduct of a trade or business within the United States, and, if required by a tax treaty, the dividends are attributable to a permanent establishment (or fixed base, in the case of an individual) maintained in the United States, we and other payors generally are not required to withhold tax from the dividends, provided that the Non-U.S. Holder has furnished to us or another payor a valid IRS Form W-8ECI or an acceptable substitute form representing, under penalties of perjury, that:

•

the Non-U.S. Holder is a non-U.S. person, and

•

the dividends are effectively connected with the conduct of a trade or business within the United States and are includible in the gross income of the Non-U.S. Holder.

“Effectively connected” dividends are taxed at rates applicable to U.S. citizens, resident aliens, and domestic U.S. corporations.

In the case of a corporate Non-U.S. Holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if the Non-U.S. Holder is eligible for the benefits of an income tax treaty that provides for a lower rate.

Sale, Exchange or Other Disposition of Common Stock

A Non-U.S. Holder generally will not be subject to U.S. federal income tax on gain recognized on a disposition of our common stock unless:

•

the gain is “effectively connected” with the conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment (or fixed base, in the case of an individual) maintained in the United States, if that is required by an applicable income tax treaty as a condition for subjecting the Non-U.S. Holder to U.S. taxation on a net income basis,

•

such Non-U.S. Holder is an individual who is present in the United States for 183 or more days in the taxable year of the disposition, and certain other conditions exist (except as provided by an applicable treaty), or

•

we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes; provided that a Non-U.S. Holder will not be subject to U.S. federal income tax on the gain on a disposition of our common stock if either (i) our common stock is regularly traded on an established securities market in the year the Non-U.S. Holder disposes of the stock and such Non-U.S. Holder did not hold, directly or indirectly, more than 5% of our common stock at any time during the five-year

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period ending on the date of disposition or (ii) the Non-U.S. Holder is eligible for any treaty exemption. We have not been, are not, and do not anticipate becoming a United States real property holding corporation for U.S. federal income tax purposes.

In the case of a corporate Non-U.S. Holder, “effectively connected” gains that are recognized may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if the Non-U.S. Holder is eligible for the benefits of an income tax treaty that provides for a lower rate.

The foregoing discussion is subject to the discussion below under “— FATCA Withholding” and “— Information Reporting and Backup Withholding.”

FATCA Withholding

Under the Foreign Account Tax Compliance Act provisions of the Code and related Treasury guidance, or FATCA, a withholding tax of 30% will be imposed in certain circumstances on payments of (a) distributions on our common stock on or after July 1, 2014 and (b) gross proceeds from the sale or other disposition of our common stock on or after January 1, 2017. In the case of payments made to a “foreign financial institution” (generally including an investment fund), as a beneficial owner or as an intermediary, the tax generally will be imposed, subject to certain exceptions, unless such institution (i) enters into (or is otherwise subject to) and complies with an agreement with the U.S. government, which we refer to as a FATCA Agreement, or (ii) is required by and complies with applicable foreign law enacted in connection with an intergovernmental agreement between the United States and a foreign jurisdiction, which we refer to as an IGA, in either case to, among other things, collect and provide to the U.S. or other relevant tax authorities certain information regarding U.S. account holders of such institution. In the case of payments made to a foreign entity that is not a financial institution (as a beneficial owner), the tax generally will be imposed, subject to certain exceptions, unless such entity provides the withholding agent with a certification that it does not have any “substantial” U.S. owner (generally, any specified U.S. person that directly or indirectly owns more than a specified percentage of such entity) or that identifies its “substantial” U.S. owners. If our common stock is held through a foreign financial institution that enters into (or is otherwise subject to) a FATCA Agreement, such foreign financial institution (or, in certain cases, a person paying amounts to such foreign financial institution) generally will be required, subject to certain exceptions, to withhold such tax on payments of dividends and proceeds described above made to (x) a person (including an individual) that fails to comply with certain information requests or (y) a foreign financial institution that has not entered into (and is not otherwise subject to) a FATCA Agreement and is not otherwise exempted from FATCA pursuant to applicable foreign law enacted in connection with an IGA. Coordinating rules may limit duplicative withholding in cases where the withholding described above in “— Distributions on Common Stock” or below in “— Information Reporting and Backup Withholding” also applies. Each Non-U.S. Holder should consult its own tax advisor regarding the application of FATCA to the ownership and disposition of our common stock.

Information Reporting and Backup Withholding

Amounts treated as payments of dividends on our common stock paid to a Non-U.S. Holder and the amount of any tax withheld from such payments must be reported annually to the IRS and to such Non-U.S. Holder.

The information reporting and backup withholding rules that apply to payments of dividends to certain U.S. persons generally will not apply to payments of dividends on our common stock to a Non-U.S. Holder if such Non-U.S. Holder certifies under penalties of perjury that it is not a United States person (generally by providing an IRS Form W-8BEN) or otherwise establishes an exemption.

Proceeds from the sale, exchange or other disposition of our common stock by a Non-U.S. Holder effected through a non-U.S. office of a U.S. broker or of a non-U.S. broker with certain specified U.S. connections generally will be subject to information reporting (but not backup withholding) unless such Non-U.S. Holder certifies under penalties of perjury that it is not a United States person (generally by providing an IRS

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Form W-8BEN) or otherwise establishes an exemption. Proceeds from the sale, exchange or other disposition of our common stock by a Non-U.S. Holder effected through a U.S. office of a broker generally will be subject to information reporting and backup withholding unless such Non-U.S. Holder certifies under penalties of perjury that it is not a United States person (generally by providing an IRS Form W-8BEN) or otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability if the required information is furnished by such Non-U.S. Holder on a timely basis to the IRS.

U.S. Federal Estate Tax

Shares of our common stock owned or treated as owned by an individual Non-U.S. Holder at the time of his or her death will be included in his or her gross estate for U.S. federal estate tax purposes and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.

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UNDERWRITING (CONFLICTS OF INTEREST)

Barclays Capital Inc. and Deutsche Bank Securities Inc. are acting as the representatives of the underwriters and Barclays Capital Inc., Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and RBC Capital Markets, LLC are acting as joint book-running managers of this offering. Under the terms of an underwriting agreement, which will be filed as an exhibit to the registration statement, each of the underwriters named below has severally agreed to purchase from us and the selling stockholders the respective number of shares of common stock shown below:


Underwriters		Number of Shares
Barclays Capital Inc.
Deutsche Bank Securities Inc.
Citigroup Global Markets Inc.
RBC Capital Markets, LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Fifth Third Securities, Inc.
PNC Capital Markets LLC

Total

The underwriting agreement provides that the underwriters’ obligation to purchase shares of common stock depends on the satisfaction of the conditions contained in the underwriting agreement including:

•

the obligation to purchase all of the shares of common stock offered hereby (other than those shares of common stock covered by their option to purchase additional shares as described below), if any of the shares are purchased;

•

the representations and warranties made by us and the selling stockholders to the underwriters are true;

•

there is no material change in our business or the financial markets; and

•

we and the selling stockholders deliver customary closing documents to the underwriters.

Commissions and Expenses

The following table summarizes the underwriting discounts and commissions we and the selling stockholders will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriters pay to us and the selling stockholders for the shares.

Selling Stockholders

No Exercise

Full Exercise

Per Share

Total

The representatives have advised us that the underwriters propose to offer the shares of common stock directly to the public at the public offering price on the cover of this prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $ per share. After the offering, the representatives may change the offering price and other selling terms.

The expenses of the offering that are payable by us and the selling stockholders are estimated to be approximately $ (excluding underwriting discounts and commissions). We have agreed to reimburse the underwriters for certain of their expenses, in an amount of up to $35,000, as set forth in the underwriting agreement.

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Option to Purchase Additional Shares

The selling stockholders have granted the underwriters an option exercisable for 30 days after the date of this prospectus to purchase, from time to time, in whole or in part, up to an aggregate of shares from the selling stockholders at the public offering price less underwriting discounts and commissions. To the extent that this option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase its pro rata portion of these additional shares based on the underwriter’s percentage underwriting commitment in the offering as indicated in the table at the beginning of this Underwriting Section.

Reserved Shares

Lock-Up Agreements

We, all of our directors and executive officers, holders of more than % of our outstanding stock and the selling stockholders have agreed that, for a period of 180 days after the date of this prospectus subject to certain limited exceptions, we and they will not directly or indirectly, without the prior written consent of Barclays Capital Inc. and Deutsche Bank Securities Inc., (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of common stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for common stock (other than the stock and shares issued pursuant to employee benefit plans, qualified stock option plans, or other employee compensation plans existing on the date of this prospectus or pursuant to currently outstanding options, warrants or rights not issued under one of those plans), or sell or grant options, rights or warrants with respect to any shares of common stock or securities convertible into or exchangeable for common stock (other than the grant of options pursuant to option plans existing on the date of this prospectus), (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or other securities, in cash or otherwise, (3) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible, exercisable or exchangeable into common stock or any of our other securities (other than any registration statement on Form S-8), or (4) publicly disclose the intention to do any of the foregoing.

If:

•

during the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to us occurs; or

•

prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,

the 180-day restricted period described above will be extended (and the restrictions above will continue to apply) until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or occurrence of the material event, unless Barclays Capital Inc. and Deutsche Bank Securities Inc. (in their sole discretion) confirm to us in writing that such extension will not be required.

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Barclays Capital Inc. and Deutsche Bank Securities Inc., in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time. When determining whether or not to release common stock and other securities from lock-up agreements, Barclays Capital Inc. and Deutsche Bank Securities Inc. will consider, among other factors, the holder’s reasons for requesting the release, the number of shares of common stock and other securities for which the release is being requested and market conditions at the time. At least three business days before the effectiveness of any release or waiver of any of the restrictions described above with respect to an officer or director of us, Barclays Capital Inc. and Deutsche Bank Securities Inc. will notify us of the impending release or waiver and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver, except where the release or waiver is effected solely to permit a transfer of common stock that is not for consideration and where the transferee has agreed in writing to be bound by the same terms as the lock-up agreements described above to the extent and for the duration that such terms remain in effect at the time of transfer.

Offering Price Determination

Prior to this offering, there has been no public market for our common stock. The initial public offering price was negotiated between the representatives and us. In determining the initial public offering price of our common stock, the representatives considered:

•

the history and prospects for the industry in which we compete;

•

our financial information;

•

the ability of our management and our business potential and earning prospects;

•

the prevailing securities markets at the time of this offering; and

•

the recent market prices of, and the demand for, publicly traded shares of generally comparable companies.

Indemnification

We and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

Stabilization, Short Positions and Penalty Bids

The representatives may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Exchange Act:

•

Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

•

A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase is not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares and/or purchasing shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for

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purchase in the open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

•

Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions.

•

Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise and, if commenced, may be discontinued at any time.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters make any representation that the representatives will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Listing on the NYSE

We intend to apply to list our common stock on the NYSE under the symbol “WMS.”

Discretionary Sales

The underwriters have informed us that they do not expect to sell more than 5% of the common stock in the aggregate to accounts over which they exercise discretionary authority.

Stamp Taxes

If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Other Relationships

The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for the issuer and its affiliates, for which they received or may in the future receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer or its affiliates. If the underwriters or their affiliates have a lending relationship with us, certain other of those underwriters or their affiliates may hedge, their credit exposure to us consistent with their customary risk

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management policies. Typically, the underwriters and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the shares of common stock offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the shares of common stock offered hereby. The underwriters and certain of their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Conflicts of Interest

The net proceeds received by us from this offering will be used to repay borrowings under our revolving credit facility. Because affiliates of Fifth Third Securities, Inc. and PNC Capital Markets LLC are lenders under our revolving credit facility and each will receive 5% or more of the net proceeds received by us from this offering, Fifth Third Securities, Inc. and PNC Capital Markets LLC are each deemed to have a “conflict of interest” under FINRA Rule 5121. As a result, this offering will be conducted in accordance with FINRA Rule 5121. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the members primarily responsible for managing the public offering do not have a conflict of interest, are not affiliates of any member that has a conflict of interest and meet the requirements of paragraph (f)(12)(E) of FINRA Rule 5121. See “Summary” and “Use of Proceeds.” Fifth Third Securities, Inc. and PNC Capital Markets LLC will not confirm any sales to any account over which it exercises discretionary authority without the specific written approval of the account holder. See “Use of Proceeds” and “Underwriting (Conflicts of Interest)” for additional information.

Selling Restrictions

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, which we refer to as a Relevant Member State, an offer to the public of any common stock which are the subject of the offering contemplated herein may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

•

to legal entities which are qualified investors as defined under the Prospectus Directive;

•

by the underwriters to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives of the underwriters for any such offer; or

•

in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of common stock shall result in a requirement for us, the selling stockholders or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State who receives any communication in respect of, or who acquires any common stock under, the offers contemplated here in this prospectus will be deemed to have represented, warranted and agreed to and with each underwriter, the selling stockholders and us that:

•

it is a qualified investor as defined under the Prospectus Directive; and

•

in the case of any common stock acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the common stock acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons

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in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in the circumstances in which the prior consent of the representatives of the underwriters has been given to the offer or resale or (ii) where common stock have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of such common stock to it is not treated under the Prospectus Directive as having been made to such persons.

For the purposes of this representation and the provision above, the expression an “offer of common stock to the public” in relation to any common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any common stock to be offered so as to enable an investor to decide to purchase or subscribe for the common stock, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom

This prospectus has only been communicated or caused to have been communicated and will only be communicated or caused to be communicated as an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act of 2000, or FSMA) as received in connection with the issue or sale of the common stock in circumstances in which Section 21(1) of the FSMA does not apply to us. All applicable provisions of the FSMA will be complied with in respect to anything done in relation to the common stock in, from or otherwise involving the United Kingdom.

Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, us or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

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Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or ASIC, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons, which we refer to as Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

Hong Kong

The shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Japan

The shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

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LEGAL MATTERS

The validity of the common stock offered in this offering will be passed upon for us by Squire Patton Boggs (US) LLP, Columbus, Ohio. Various legal matters relating to this offering will be passed upon for the underwriters by Latham & Watkins LLP, New York, New York. As of the date of this prospectus, an attorney employed by Squire Patton Boggs (US) LLP beneficially owns 2,211 shares of our common stock.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. Some items are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and the common stock offered hereby, we refer you to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus as to the contents of any contract, agreement or any other document referred to are summaries of the material terms of the respective contract, agreement or other document. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement, reference is made to the exhibits for a more complete description of the matter involved.

A copy of the registration statement, and the exhibits and schedules thereto, may be inspected without charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of these materials may be obtained by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s website is http://www.sec.gov.

Upon the completion of this offering, we will become subject to the information and periodic reporting requirements of the Exchange Act and, accordingly, will file annual reports containing financial statements audited by an independent public accounting company, quarterly reports containing unaudited financial statements, current reports, proxy statements and other information with the SEC. You will be able to inspect and copy these reports, proxy statements and other information at the public reference facilities maintained by the SEC at the address noted above. You will also be able to obtain copies of this material from the Public Reference Room of the SEC as described above, or inspect them without charge at the SEC’s website. Upon completion of this offering, you will also be able to access, free of charge, our reports filed with the SEC (for example, our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and any amendments to those forms) through the “Investor Relations” portion of our Internet website (http://www.ads-pipe.com). Reports filed with or furnished to the SEC will be available as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website is included in this prospectus as an inactive textual reference only. The information found on our website is not part of this prospectus or any report filed with or furnished to the SEC.

EXPERTS

The consolidated financial statements included in this Prospectus and the related consolidated financial statement schedule included elsewhere in the Registration Statement have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the Registration Statement. Such consolidated financial statements and consolidated financial statement schedule are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

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ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of March 31, 2013 and 2014		F-3
Consolidated Statements of Income for the fiscal years ended March 31, 2012, 2013 and 2014		F-4
Consolidated Statements of Comprehensive Income for the fiscal years ended March 31, 2012, 2013 and 2014		F-5
Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2012, 2013 and 2014		F-6
Consolidated Statements of Stockholders’ Equity and Mezzanine Equity for the fiscal years ended March 31, 2012, 2013 and 2014		F-7
Notes to Consolidated Financial Statements		F-10

Schedule II — Consolidated Valuation and Qualifying Accounts		F-44

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Advanced Drainage Systems, Inc. and subsidiaries

Hilliard, Ohio

We have audited the accompanying consolidated balance sheets of Advanced Drainage Systems, Inc. and subsidiaries (the “Company”) as of March 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, stockholders’ equity and mezzanine equity, and cash flows for each of the three years in the period ended March 31, 2014. Our audits also included the financial statement schedule listed in the Index. These consolidated financial statements and consolidated financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Advanced Drainage Systems, Inc. and subsidiaries as of March 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Columbus, Ohio

May 19, 2014

F-2

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of March 31,
(Amounts in thousands, except par value)	2013			2014
ASSETS
Current assets:
Cash	$	1,361		$	3,931
Receivables (less allowance for doubtful accounts of $4,689 and $3,977, respectively)		146,478			150,713
Inventories		232,409			260,300
Deferred income taxes and other current assets		7,173			13,555

Total current assets		387,421			428,499
Property, plant and equipment, net		294,901			292,082
Other assets:
Goodwill		86,259			86,297
Intangible assets, net		78,717			66,184
Other assets		60,441			64,533

Total assets	$	907,739		$	937,595

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt obligations	$	11,942		$	11,153
Accounts payable		110,251			108,111
Other accrued liabilities		35,441			37,956
Accrued income taxes		9,511			7,372

Total current liabilities		167,145			164,592
Long-term debt obligation		338,048			442,895
Deferred tax liabilities		74,114			69,169
Other liabilities		5,808			15,324

Total liabilities		585,115			691,980

Commitments and contingencies (see Note 12)

Mezzanine equity:
Redeemable Common Stock; $0.01 par value: 8,135 and 8,141 issued and outstanding, respectively		522,276			549,119
Redeemable Convertible Preferred Stock; $0.01 par value: 10,000 authorized: 9,384 issued, 5,640 and 5,551 outstanding, respectively		282,547			291,720
Deferred compensation — unearned ESOP shares		(196,477	)		(197,888	)

Total mezzanine equity		608,346			642,951

Stockholders’ equity:
Common stock; $0.01 par value: 23,365 and 23,359 authorized and issued, respectively: 1,867 and 1,942 outstanding, respectively		11,957			11,957
Paid-in capital		41,152			22,547
Common stock in treasury, at cost		(448,571	)		(448,439	)
Accumulated other comprehensive loss		(856	)		(5,977	)
Retained earnings		87,331			—

Total ADS stockholders’ equity		(308,987	)		(419,912	)
Noncontrolling interest in subsidiaries		23,265			22,576

Total stockholders’ equity		(285,722	)		(397,336	)

Total liabilities, mezzanine equity and stockholders’ equity	$	907,739		$	937,595

See accompanying notes to consolidated financial statements.

F-3

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	Fiscal Years Ended March 31,
(Amounts in thousands, except per share data)	2012			2013			2014
Net sales	$	1,013,756		$	1,017,041		$	1,069,009
Cost of goods sold		818,398			807,730			856,118

Gross profit		195,358			209,311			212,891
Operating expenses:
Selling		67,625			69,451			75,024
General and administrative		65,927			67,712			78,478
Gain on sale of assets/business		(44,634	)		(2,210	)		(5,338	)
Intangible amortization		11,387			11,295			11,412

Income from operations		95,053			63,063			53,315
Other (income) expense:
Interest expense		21,837			16,095			16,141
Other miscellaneous expense, net		2,425			283			133

Income before income taxes		70,791			46,685			37,041
Income tax expense		27,064			16,894			22,575
Equity in net (income) loss of unconsolidated affiliates		(704	)		(387	)		1,592

Net income		44,431			30,178			12,874
Less net income attributable to noncontrolling interest		1,171			2,019			1,750

Net income attributable to ADS		43,260			28,159			11,124

Change in fair value of Redeemable Convertible Preferred Stock		(10,257	)		(5,869	)		(3,979	)
Dividends paid to Redeemable Convertible Preferred Stockholders		(668	)		(736	)		(10,139	)
Dividends paid to unvested restricted stockholders		(34	)		(52	)		(418	)

Net income (loss) available to common stockholders and participating securities		32,301			21,502			(3,412	)
Undistributed (income) loss allocated to participating securities		(3,241	)		(2,042	)		—

Net income (loss) available to common stockholders	$	29,060		$	19,460		$	(3,412	)

Weighted average common shares outstanding:
Basic		9,835			9,921			10,044
Diluted		9,996			10,038			10,044
Net income (loss) per share:
Basic	$	2.95		$	1.96		$	(0.34	)
Diluted	$	2.91		$	1.94		$	(0.34	)
Cash dividends declared per share	$	0.44		$	0.48		$	7.91

Supplemental pro forma net income (loss) per share (unaudited)
Basic
Diluted
Weighted average common shares outstanding used to calculate supplemental pro forma net income (loss) per share

See accompanying notes to consolidated financial statements.

F-4

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Fiscal Years Ended March 31,
(Amounts in thousands)	2012			2013			2014
Net income	$	44,431		$	30,178		$	12,874
Other comprehensive (loss) income:
Currency translation, before tax		(544	)		2,040			(8,180	)
Other, before tax		44			(41	)		6

Total other comprehensive (loss) income, before tax		(500	)		1,999			(8,174	)

Tax attributes of items in other comprehensive income (loss):
Currency translation		83			(298	)		1,770
Other		(17	)		16			(2	)

Total tax benefit (expense)		66			(282	)		1,768

Comprehensive income		43,997			31,895			6,468
Less other comprehensive (loss) income attributable to noncontrolling interest, net of tax		(506	)		1,198			(1,285	)
Less net income attributable to noncontrolling interest		1,171			2,019			1,750

Total comprehensive income attributable to ADS	$	43,332		$	28,678		$	6,003

See accompanying notes to consolidated financial statements.

F-5

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Fiscal Years Ended March 31,
(Amounts in thousands)	2012			2013			2014
Cash Flows from Operating Activities
Net income	$	44,431		$	30,178		$	12,874
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		55,171			55,605			55,898
Impairment of Hancor trademark		3,200			—			—
Deferred income taxes		(5,556	)		(4,804	)		(5,096	)
Gain on sale of assets/business		(44,634	)		(2,210	)		(5,338	)
ESOP and stock based compensation expense		6,382			9,875			35,802
Amortization of deferred financing charges		1,935			1,929			1,602
Other non-cash operating activities		2,888			854			2,417
Changes in working capital (see Note 21)		(6,820	)		(23,212	)		(36,037	)

Net cash provided by operating activities		56,997			68,215			62,122

Cash Flows from Investing Activities
Capital expenditures		(26,467	)		(40,004	)		(40,288	)
Property insurance proceeds		3,601			—			—
Proceeds from sale of assets/business		38,953			600			8,907
Cash paid for acquisitions		(45,225	)		(4,839	)		—
Investment in unconsolidated affiliate		(2,500	)		—			(6,375	)
Additions of capitalized software		(3,396	)		(2,389	)		(3,310	)
Other investing activities		(799	)		(567	)		(701	)

Net cash used in investing activities		(35,833	)		(47,199	)		(41,767	)

Cash Flows from Financing Activities
Redemption of Redeemable Convertible Preferred Stock		(3,579	)		(3,031	)		(4,428	)
Cash dividends paid		(4,931	)		(5,442	)		(112,747	)
Purchase of treasury stock — common		(663	)		(249	)		(1,063	)
(Payments) loan on CSV life insurance policies		(6,490	)		7,693			—
Debt issuance costs		—			—			(2,311	)
Proceeds from Senior Notes		—			—			25,000
Proceeds from term loan		—			—			100,000
Payments on term loan		(10,000	)		(10,000	)		(80,000	)
Payments of notes, mortgages, and other debt		(2,574	)		(1,882	)		(1,942	)
Proceeds from Revolving Credit Facility		389,000			331,200			490,703
Payments on Revolving Credit Facility		(380,500	)		(340,000	)		(429,660	)
Other financing activities		(1,496	)		(26	)		(1,264	)

Net cash used in financing activities		(21,233	)		(21,737	)		(17,712	)

Effect of exchange rate changes on cash and cash equivalents		—			—			(73	)

Net change in cash and equivalents		(69	)		(721	)		2,570
Cash and equivalents at beginning of year		2,151			2,082			1,361

Cash and equivalents at end of year	$	2,082		$	1,361		$	3,931

See accompanying notes to consolidated financial statements.

F-6

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY


	Common Stock					Paid- In Capital			Common Stock in Treasury						Accumulated Other Comprehensive Loss			Retained Earnings			Total ADS Stock- holders’ Equity			Non- controlling Interest in Subsidiaries			Total Stock- holders’ Equity			Redeemable Common Stock				Redeemable Convertible Preferred Stock						Deferred Compensation — Unearned ESOP Shares						Total Mezzanine Equity
(Amounts in thousands, except per share data)	Shares			Amount		Paid- In Capital			Shares			Amount			Accumulated Other Comprehensive Loss			Retained Earnings			Total ADS Stock- holders’ Equity			Non- controlling Interest in Subsidiaries			Total Stock- holders’ Equity			Shares		Amount		Shares			Amount			Shares			Amount			Total Mezzanine Equity
Balance at April 1, 2011		23,370			11,957		39,702			21,661			(450,291	)		(1,447	)		134,373			(265,706	)		20,479			(245,227	)		8,130		430,276		5,795			229,214			4,193			(165,816	)		493,674

Net income		—			—		—			—			—			—			43,260			43,260			1,171			44,431			—		—		—			—			—			—			—
Other comprehensive income (loss)		—			—		—			—			—			72			—			72			(506	)		(434	)		—		—		—			—			—			—			—
Redeemable Convertible Preferred Stock dividend		—			—		—			—			—			—			(564	)		(564	)		—			(564	)		—		—		—			—			—			—			—
Common stock dividend ($0.44 per share)		—			—		—			—			—			—			(4,367	)		(4,367	)		—			(4,367	)		—		—		—			—			—			—			—
Dividend paid to noncontrolling interest holder		—			—		—			—			—			—			—			—			(516	)		(516	)		—		—		—			—			—			—			—
Allocation of ESOP shares to participants for:
Compensation		—			—		(420	)		—			—			—			—			(420	)		—			(420	)		—		—		—			—			(116	)		5,377			5,377
Dividend		—			—		—			—			—			—			(104	)		(104	)		—			(104	)		—		—		—			—			(2	)		104			104
Exercise of common stock options		—			—		(1,305	)		(103	)		2,140			—			—			835			—			835			—		—		—			—			—			—			—
Redemption of common shares to exercise stock options		—			—		1,278			25			(1,278	)		—			—			—			—			—			—		—		—			—			—			—			—
Stock based compensation		—			—		811			—			—			—			—			811			—			811			—		—		—			—			—			—			—
Restricted stock awards		—			—		(153	)		(18	)		509			—			—			356			—			356			—		—		—			—			—			—			—
Redemption of Redeemable Convertible Preferred Stock		—			—		—			—			—			—			—			—			—			—			—		—		(90	)		(3,579	)		—			—			(3,579	)
Purchase of common stock		—			—		—			14			(663	)		—			—			(663	)		—			(663	)		—		—		—			—			—			—			—
Reclassification of common stock to Redeemable Common Stock		(5	)		—		(252	)		—			—			—			—			(252	)		—			(252	)		5		252		—			—			—			—			252
Adjustments to Redeemable Convertible Preferred Stock fair value measurement		—			—		—			—			—			—			(10,257	)		(10,257	)		—			(10,257	)		—		—		—			38,794			—			(28,537	)		10,257
Adjustments to Redeemable Common Stock fair value measurement		—			—		—			—			—			—			(51,478	)		(51,478	)		—			(51,478	)		—		51,478		—			—			—			—			51,478

Balance at March 31, 2012		23,365			11,957		39,661			21,579			(449,583	)		(1,375	)		110,863			(288,477	)		20,628			(267,849	)		8,135		482,006		5,705			264,429			4,075			(188,872	)		557,563

F-7

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY


	Common Stock				Paid- In Capital			Common Stock in Treasury						Accumulated Other Comprehensive Loss			Retained Earnings			Total ADS Stock- holders’ Equity			Non- controlling Interest in Subsidiaries			Total Stock- holders’ Equity			Redeemable Common Stock				Redeemable Convertible Preferred Stock						Deferred Compensation — Unearned ESOP Shares						Total Mezzanine Equity
(Amounts in thousands, except per share data)	Shares		Amount		Paid- In Capital			Shares			Amount			Accumulated Other Comprehensive Loss			Retained Earnings			Total ADS Stock- holders’ Equity			Non- controlling Interest in Subsidiaries			Total Stock- holders’ Equity			Shares		Amount		Shares			Amount			Shares			Amount			Total Mezzanine Equity
Balance at April 1, 2012		23,365		11,957		39,661			21,579			(449,583	)		(1,375	)		110,863			(288,477	)		20,628			(267,849	)		8,135		482,006		5,705			264,429			4,075			(188,872	)		557,563

Net income		—		—		—			—			—			—			28,159			28,159			2,019			30,178			—		—		—			—			—			—			—
Other comprehensive income (loss)		—		—		—			—			—			519			—			519			1,198			1,717			—		—		—			—			—			—			—
Redeemable Convertible Preferred Stock dividend		—		—		—			—			—			—			(625	)		(625	)		—			(625	)		—		—		—			—			—			—			—
Common stock dividend ($0.48 per share)		—		—		—			—			—			—			(4,817	)		(4,817	)		—			(4,817	)		—		—		—			—			—			—			—
Dividend paid to noncontrolling interest holder		—		—		—			—			—			—			—			—			(580	)		(580	)		—		—		—			—			—			—			—
Allocation of ESOP shares to participants for:
Compensation		—		—		(282	)		—			—			—			—			(282	)		—			(282	)		—		—		—			—			(151	)		7,565			7,565
Dividend		—		—		—			—			—			—			(110	)		(110	)		—			(110	)		—		—		—			—			(2	)		110			110
Exercise of common stock options		—		—		(403	)		(69	)		1,436			—			—			1,033			—			1,033			—		—		—			—			—			—			—
Redemption of common shares to exercise stock options		—		—		805			14			(805	)		—			—			—			—			—			—		—		—			—			—			—			—
Stock based compensation		—		—		539			—			—			—			—			539			—			539			—		—		—			—			—			—			—
Restricted stock awards		—		—		832			(30	)		630			—			—			1,462			—			1,462			—		—		—			—			—			—			—
Redemption of Redeemable Convertible Preferred Stock		—		—		—			—			—			—			—			—			—			—			—		—		(65	)		(3,031	)		—			—			(3,031	)
Purchase of common stock		—		—		—			4			(249	)		—			—			(249	)		—			(249	)		—		—		—			—			—			—			—
Reclassification of common stock to Redeemable Common Stock		—		—		—			—			—			—			—			—			—			—			—		—		—			—			—			—			—
Adjustments to Redeemable Convertible Preferred Stock fair value measurement		—		—		—			—			—			—			(5,869	)		(5,869	)		—			(5,869	)		—		—		—			21,149			—			(15,280	)		5,869
Adjustments to Redeemable Common Stock fair value measurement		—		—		—			—			—			—			(40,270	)		(40,270	)		—			(40,270	)		—		40,270		—			—			—			—			40,270

Balance at March 31, 2013		23,365		11,957		41,152			21,498			(448,571	)		(856	)		87,331			(308,987	)		23,265			(285,722	)		8,135		522,276		5,640			282,547			3,922			(196,477	)		608,346

F-8

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY


	Common Stock					Paid- In Capital			Common Stock in Treasury						Accumulated Other Comprehensive Loss			Retained Earnings			Total ADS Stock- holders’ Equity			Non- controlling Interest in Subsidiaries			Total Stock- holders’ Equity			Redeemable Common Stock				Redeemable Convertible Preferred Stock						Deferred Compensation — Unearned ESOP Shares						Total Mezzanine Equity
(Amounts in thousands, except per share data)	Shares			Amount		Paid- In Capital			Shares			Amount			Accumulated Other Comprehensive Loss			Retained Earnings			Total ADS Stock- holders’ Equity			Non- controlling Interest in Subsidiaries			Total Stock- holders’ Equity			Shares		Amount		Shares			Amount			Shares			Amount			Total Mezzanine Equity
Balance at April 1, 2013		23,365			11,957		41,152			21,498			(448,571	)		(856	)		87,331			(308,987	)		23,265			(285,722	)		8,135		522,276		5,640			282,547			3,922			(196,477	)		608,346

Net income		—			—		—			—			—			—			11,124			11,124			1,750			12,874			—		—		—			—			—			—			—
Other comprehensive income (loss)		—			—		—			—			—			(5,121	)		—			(5,121	)		(1,285	)		(6,406	)		—		—		—			—			—			—			—
Redeemable Convertible Preferred Stock dividend		—			—		—			—			—			—			(10,021	)		(10,021	)		—			(10,021	)		—		—		—			—			—			—			—
Common stock dividend ($7.91 per share)		—			—		—			—			—			—			(80,102	)		(80,102	)		—			(80,102	)		—		—		—			—			—			—			—
Dividend paid to noncontrolling interest holder		—			—		—			—			—			—			—			—			(1,154	)		(1,154	)		—		—		—			—			—			—			—
Allocation of ESOP shares to participants for:
Compensation		—			—		(203	)		—			—			—			—			(203	)		—			(203	)		—		—		—			—			(154	)		8,093			8,093
Dividend		—			—		—			—			—			—			(118	)		(118	)		—			(118	)		—		—		—			—			(2	)		118			118
Exercise of common stock options		—			—		(861	)		(91	)		1,896			—			—			1,035			—			1,035			—		—		—			—			—			—			—
Redemption of common shares to exercise stock options		—			—		1,187			18			(1,187	)		—			—			—			—			—			—		—		—			—			—			—			—
Stock based compensation		—			—		2,517			—			—			—			—			2,517			—			2,517			—		—		—			—			—			—			—
Restricted stock awards		—			—		1,363			(25	)		486			—			—			1,849			—			1,849			—		—		—			—			—			—			—
Redemption of Redeemable Convertible Preferred Stock		—			—		—			—			—			—			—			—			—			—			—		—		(89	)		(4,428	)		—			—			(4,428	)
Purchase of common stock		—			—		—			17			(1,063	)		—			—			(1,063	)		—			(1,063	)		—		—		—			—			—			—			—
Reclassification of common stock to Redeemable Common Stock		(6	)		—		(385	)		—			—			—			—			(385	)		—			(385	)		6		385		—			—			—			—			385
Adjustments to Redeemable Convertible Preferred Stock fair value measurement		—			—		—			—			—			—			(3,979	)		(3,979	)		—			(3,979	)		—		—		—			13,601			—			(9,622	)		3,979
Adjustments to Redeemable Common Stock fair value measurement		—			—		(22,223	)		—			—			—			(4,235	)		(26,458	)		—			(26,458	)		—		26,458		—			—			—			—			26,458

Balance at March 31, 2014		23,359			11,957		22,547			21,417			(448,439	)		(5,977	)		—			(419,912	)		22,576			(397,336	)		8,141		549,119		5,551			291,720			3,766			(197,888	)		642,951

See accompanying notes to consolidated financial statements.

F-9

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share data)

1.	BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Advanced Drainage Systems, Inc. and subsidiaries (collectively referred to as “ADS”, the “Company”, “we”, “us” and “our”), incorporated in Delaware, designs, manufactures and markets high performance thermoplastic corrugated pipe and related water management products, primarily in North and South America and Europe.

The Company is managed based primarily on the geographies in which it operates and reports results of operations in two reportable segments. The reportable segments are Domestic and International.

Principles of Consolidation

Our consolidated financial statements include the Company, our wholly owned subsidiaries, our majority owned subsidiaries and variable interest entities (“VIEs”) of which we are the primary beneficiary. We use the equity method of accounting for equity investments where we exercise significant influence but do not hold a controlling financial interest. Such investments are recorded in Other assets in our Consolidated Balance Sheets and the related equity earnings from these investments is included in Equity in net (income) loss of unconsolidated affiliates in our Consolidated Statements of Income. All intercompany balances and transactions have been eliminated in consolidation.

Estimates

Allowance for Doubtful Accounts

Credit is extended to customers based on an evaluation of their financial condition and collateral is generally not required. The evaluation of the customer’s financial condition is performed to reduce the risk of loss. Accounts receivable are evaluated for collectability based on numerous factors, including the length of time individual receivables are past due, past transaction history with customers, their credit worthiness and the economic environment. An allowance for doubtful accounts is estimated as a percentage of aged receivables. This estimate is periodically adjusted when management becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in historical collection patterns.

F-10

Inventories

Inventories are stated at the lower of cost or market value. The Company’s inventories are maintained on the FIFO method. Costs include the cost of acquiring materials, direct and indirect labor and factory overhead. The Company recognizes the portion of fixed manufacturing overheads that relates to production that does not meet the definition of normal capacity as an expense in the period in which it is incurred.

Market value of inventory is established based on the lower of cost or estimated net realizable value, with consideration given to deterioration, obsolescence, and other factors. The Company periodically evaluates the carrying value of inventories and adjustments are made whenever necessary to reduce the carrying value to market value.

Property, Plant, and Equipment and Depreciation Method

Property, plant, and equipment is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:


		Years
Buildings		40
Machinery and equipment		7 - 15
Leasehold improvements		Life of lease
Capitalized software costs		3 - 7

Costs of additions and major improvements are capitalized, whereas maintenance and repairs that do not improve or extend the life of the asset are charged to expense as incurred. Construction in progress is also recorded at cost and includes capitalized interest, capitalized payroll costs and related costs such as taxes and other fringe benefits. When assets are retired or sold, the cost and related accumulated depreciation are removed from the asset accounts and any resulting gain or loss is reflected in our Consolidated Statements of Income.

Long-Lived Assets

Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that carrying amounts of an asset group may not be recoverable. Asset groups are established primarily by determining the lowest level of identifiable cash flows that are largely independent of the cash flows of other groups of assets and liabilities. If the estimated undiscounted cash flows are less than the carrying amounts of such assets, an impairment loss in an amount necessary to write down the assets to fair value is determined from expected future discounted cash flows. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions.

The Company did not incur any impairment expense for long-lived assets in the fiscal years ended March 31, 2012, 2013 and 2014.

Goodwill

The Company accounts for costs of acquired assets in excess of fair value (“goodwill”) and other intangible assets not subject to amortization in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other”. Goodwill is reviewed annually for impairment as of March 31 or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The goodwill impairment analysis is comprised of two steps. The first step requires the comparison of the fair value of the applicable reporting unit to its respective carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and the Company would not be required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step of the impairment test in order to determine the implied fair

F-11

value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference. With respect to this testing, a reporting unit is a component of the Company for which discrete financial information is available and regularly reviewed by management. Implied fair value of goodwill is determined by considering both the income and market approach. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. The fair value estimates are based on assumptions management believes to be reasonable, but are inherently uncertain.

The Company did not incur any impairment expense for goodwill in the fiscal years ended March 31, 2012, 2013 and 2014.

Intangible Assets — Definite Lived

Definite-lived intangible assets are amortized using the straight-line method over their estimated useful lives, and are tested for recoverability whenever events or changes in circumstances indicate that carrying amounts of the asset group may not be recoverable. Asset groups are established primarily by determining the lowest level of cash flows available. If the estimated undiscounted future cash flows are less than the carrying amounts of such assets, an impairment loss is recognized to the extent the fair value of the asset less any costs of disposition is less than the carrying amount of the asset. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions.

In April 2011, the Company recharacterized the Hancor trademark previously classified as indefinite lived since 2005, to definite lived based on management’s decision to discontinue the use of the trademark over the next 15 years. When such a change is made, the asset is required to be tested for impairment. The Company tested the trademark for impairment using the relief from royalty valuation method and recorded an impairment charge of $3,200 in General and administrative expenses in the Consolidated Statements of Income, resulting in the carrying value of the trademark being reduced, and thus equal, to the estimated fair value, which will be amortized over a 15-year period.

No additional impairment charges were recorded in the fiscal years ended March 31, 2012, 2013 or 2014.

Intangible Assets — Indefinite Lived

Indefinite-lived intangible assets are tested for impairment annually as of March 31 or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. The Company bases its fair value estimates on assumptions it believes to be reasonable, but that are inherently uncertain. To estimate the fair value of these indefinite-lived intangible assets, the Company uses an income approach, which utilizes a market derived rate of return to discount anticipated performance. An impairment loss is recognized when the estimated fair value of the intangible asset is less than the carrying value.

The Company did not record any impairment in the fiscal years ended March 31, 2012, 2013 or 2014 other than the Hancor trademark impairment described previously.

Other Assets

Other assets include investments in unconsolidated affiliates accounted for under the equity method, capitalized software development costs, central parts, certain deferred financing costs and cash surrender value of officer life insurance on key senior management executives. The Company capitalizes software development costs for internal use. Capitalization of software development costs begins in the application

F-12

development stage and ends when the asset is placed into service. The Company amortizes such costs using the straight-line method over estimated useful lives and is included in General and administrative expenses or Cost of goods sold within our Consolidated Statements of Income depending on the nature of the asset and its intended use. Amortization expense related to certain deferred financing costs is included in Interest expense within our Consolidated Statements of Income. Central parts represent spare production equipment items held by the Company which are used to replace broken production equipment parts and help reduce the risk of prolonged equipment outages.

Other assets as of the fiscal years ended March 31 consisted of the following:


(Amounts in thousands)	2013		2014
Investments in unconsolidated affiliates	$	22,012	$	25,231
Capitalized software development costs		15,912		15,247
Central parts		10,386		9,067
Deferred financing costs		5,260		5,969
Cash surrender value of officer life insurance		403		1,200
Deposits		2,172		5,501
Note receivable		1,200		600
Other		3,096		1,718

Total other assets	$	60,441	$	64,533

The following table sets forth amortization expense in each of the fiscal years ending March 31:


(Amounts in thousands)	2012		2013		2014
Capitalized software development costs	$	4,875	$	4,494	$	4,308
Deferred financing costs		1,935		1,996		1,602

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are translated at a monthly average exchange rate and equity transactions are translated using either the actual exchange rate on the day of the transaction or a monthly average exchange rate.

Net Sales

ADS recognizes Net sales when persuasive evidence of an agreement exists, delivery has occurred, the price to the buyer is fixed and determinable and collectability is reasonably assured.

ADS ships products to customers predominantly by internal fleet and to a lesser extent by third-party carriers. Sales, net of sales tax and allowances for returns, rebates and discounts are recognized from product sales when title to the products is passed to the customer, which generally occurs upon delivery.

Shipping Costs

Shipping costs are incurred to physically move our products from the production or storage facility to our customers. Shipping costs for the fiscal years ended March 31, 2012, 2013 and 2014 were $107,293, $108,908 and $110,973, respectively, and are included in Cost of goods sold. All shipping costs billed to customers are included in Net sales.

Stock Based Compensation

ADS has several programs for stock based payments to employees and directors in accordance with FASB ASC Topic 718, Compensation — Stock Compensation . Equity-classified awards are measured based on the grant-date estimated fair value of each award, net of estimated forfeitures, and liability-classified awards are

F-13

re-measured at their fair value, net of estimated forfeitures, at each reporting date for accounting purposes. Compensation expense is recognized over the employee’s requisite service period, which is generally the vesting period of the grant. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. Compensation expense is recorded for new awards and existing awards that are modified, repurchased, or forfeited. For details of our stock based compensation award programs, please see Note 17, Stock Compensation.

Research and Development

Research and development costs are expensed as incurred. Research and development costs are recorded in General and administrative expenses in the Consolidated Statements of Income and are immaterial for the fiscal years ended March 31, 2012, 2013 and 2014.

Advertising

We expense advertising costs as incurred. Advertising costs are recorded in Selling expenses in the Consolidated Statements of Income. The total advertising costs were $2,666, $2,732, and $2,335 for the fiscal years ended March 31, 2012, 2013 and 2014, respectively.

Self Insurance

ADS is self-insured for workers’ compensation insurance with stop-loss coverage for claims that exceed $250 per incident up to the respective state statutory limits. Total claims expense was $1,597, $1,250, and $1,395 for the fiscal years ended March 31, 2012, 2013 and 2014, respectively. Management has established a reserve for claims incurred but not reported based on our estimate of future claims related to current operations.

The Company provides life, accidental death and dismemberment and medical coverage for substantially all eligible employees. The Company is self-insured for medical and compensation claims up to the individual and aggregate stop-loss coverage limits. The Company contributed $29,101, $29,969, and $29,484 to fund the plan for the fiscal years ended March 31, 2012, 2013 and 2014, respectively.

Income Taxes

The Company adopted the authoritative guidance on accounting for and disclosure of uncertainty in tax positions on January 1, 2009, which required the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation process, based upon the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority.

F-14

Fair Values

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2 — Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 — Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The carrying amounts of current assets and liabilities approximate their fair market value because of the immediate or short-term maturity of these financial instruments. The carrying and fair values of the Company’s Senior Notes (discussed in Note 10) were $100,000 and $104,211, respectively, as of March 31, 2014. The fair value of the Senior Notes was determined based on a comparison of the interest rate and terms of such borrowings to the rates and terms of similar debt available for the period. Management believes the carrying amount on the remaining long-term debt is not materially different from its fair value as the interest rates and terms of the borrowings are similar to currently available borrowings. The categorization of the framework used to evaluate this debt is considered Level 2.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of accounts receivable. The Company provides its products to customers based on an evaluation of the customers’ financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors the exposure for credit losses and maintains allowances for anticipated losses. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company’s customer base and their dispersion across many different geographies. The Company performs ongoing credit evaluations of its customers.

Leases

Leases are reviewed for capital or operating classification at their inception under the guidance of FASB ASC Topic 840, Leases. The Company uses its incremental borrowing rate in the assessment of lease classification and assumes the initial lease term includes renewal options that are reasonably assured. For leases classified as operating leases, we record rent expense on a straight-line basis, over the lease term beginning with the date the Company has access to the property which in some cases is prior to commencement of lease payments. Accordingly, the amount of rental expense recognized in excess of lease payments is recorded as a deferred rent liability and is amortized to rental expense over the remaining term of the lease. Capital leases as of March 31, 2013 and 2014 are not material.

Derivatives

We recognize derivative instruments as either assets or liabilities and measure those instruments at fair value. We use interest rate swaps, commodity options in the form of collars, and foreign currency forward contracts to manage our various exposures to interest rate, commodity price, and exchange rate fluctuations. These instruments do not qualify for hedge accounting treatment under ASC 810-15 and therefore, gains and losses from contract settlements and changes in fair value of the derivative instruments are recognized in Other miscellaneous (income) expense, net in the Consolidated Statements of Income. Our policy is to present all derivative balances on a gross basis.

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Recent Accounting Pronouncements

Fair value measurement — In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820) , which clarifies the measurement of fair value for certain assets and liabilities and expands the disclosure requirements for Level 3 fair value investments. The amendments in this ASU are intended to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU No. 2011-04 became effective for the Company in the fiscal year ending March 31, 2013. The adoption of the amended guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Comprehensive income: Presentation — In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) , accounting guidance related to the presentation of comprehensive income in ASC 220, Comprehensive Income . The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. Under this guidance, entities are required to report the components of net income and comprehensive income either in one continuous statement or in two separate but consecutive statements. The option to present items of other comprehensive income in the statement of changes in equity was eliminated. The guidance became effective for the Company in the fiscal year ending March 31, 2013. The Company elected to present the components of net income and other comprehensive income in the two statement format.

Comprehensive income: Reclassifications — In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220) , accounting guidance related to the presentation of comprehensive income in ASC 220, Comprehensive Income . This ASU supersedes and replaces the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU 2011-05, which were deferred indefinitely under ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” which was issued in December 2011. The amendments in ASU 2013-02 would require an entity to provide additional information about reclassifications out of accumulated other comprehensive income by the respective line items of net income. For public entities, the provisions of this ASU became effective for reporting periods beginning after December 15, 2012. The Company elected to early adopt this ASU, and the amended guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Income Taxes — In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740), which requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carry forward. However, if a net operating loss carry forward, a similar tax loss, or a tax credit carry forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments are not expected to have a material impact on our consolidated financial statements and related disclosures.

Discontinued Operations — In April 2014, the FASB issued authoritative guidance amending existing requirements for reporting discontinued operations. Under the new guidance, discontinued operations reporting will be limited to disposal transactions that represent strategic shifts having a major effect on operations and financial results. The amended guidance also enhances disclosures and requires assets and liabilities of a discontinued operation to be classified as such for all periods presented in the financial statements. Public entities will apply the amended guidance prospectively to all disposals occurring within annual periods beginning on or after December 15, 2014, and interim periods within those years. We will

F-16

adopt this standard effective April 1, 2015. Due to the change in requirements for reporting discontinued operations described above, presentation and disclosures of future disposal transactions after adoption may be different than under current standards.

2.	SALE OF ASSETS/BUSINESSES

On November 21, 2011, we entered into an asset purchase agreement (the “ISI Agreement”) to sell our septic chamber business to Infiltrator Systems, Inc. (“ISI”). The ISI Agreement defined the purchase price to consist of a cash payment of $40,000 (to be adjusted for the change in inventory value from the signing date to closing date), plus other consideration in the form of various future benefits (primarily reduced costs) provided to ADS as a result of amendments to existing supply agreements (“Intellectual Property Agreement” and “Manufacturing Agreement”) and the execution of a new Septic Chamber Distribution Agreement. The existing supply agreements resulted from the purchase of StormTech, LLC (“StormTech”) in 2010. The Septic Chamber Distribution Agreement allows ADS to continue to sell Biodiffuser and Arc chambers as a nonexclusive distributor, but provides purchase discounts and a rebate. The sale transaction closed on January 17, 2012.

At closing, we received a cash payment of $38,953 (adjusted for the change in inventory value). The amended Intellectual Property Agreement reduced the royalty rate on sales of StormTech chambers from 4% to 0%. Our liability for royalties owed to ISI as part of the purchase of StormTech was $11,317 as of the closing date. The fair values for the amended Manufacturing Agreement (reduced cost of StormTech chambers purchased by ADS from ISI) and the Septic Chamber Distribution Agreement (reduced costs for chamber purchases, plus a rebate) were determined by management with the assistance of an independent third-party valuation firm. The values established for the Manufacturing Agreement and Septic Chamber Distribution Agreement were $3,600 and $7,600, respectively. Consequently, the total consideration received from the sale of the septic chamber business amounted to $61,470. The net book value for the related assets, consisting of inventory, property, and equipment, and patents, was $13,116. As part of the transaction the Company wrote off $3,720 in goodwill, bringing the net gain recognized to $44,634. We also incurred $1,823 in transaction costs related to the sale of the business, which is recorded in General and administrative expenses. The values for the Manufacturing Agreement and the Septic Chamber Distribution Agreement are recorded in intangible assets and will be amortized ratably over the seven year term of the agreements.

Our continuing involvement with the septic chamber business precludes classification of these transactions as discontinued operations.

On December 21, 2012, we entered into an asset purchase agreement (the “Basalite Agreement”) to sell substantially all of the assets used in connection with our plastic edging product line to Basalite Concrete Products, LLC (“Basalite”) in exchange for cash and a note receivable. The Basalite Agreement defined the purchase price to consist of a cash payment of $600, plus other consideration in the form of an executed promissory note for $1,800. Under terms of the note, Basalite will pay ADS $600 cash on each of the first three one-year anniversaries of the closing date. The net book value for the related assets, consisting of inventory and property and equipment, was $190 bringing the net gain recognized to $2,210. The sale transaction closed on December 28, 2012.

On June 28, 2013, we entered into an Asset Purchase Agreement (the “NDS Agreement”) to sell substantially all of the assets used in connection with our DrainTech product line to National Diversified Sales, Inc. (“NDS”) in exchange for cash. The NDS Agreement defined the purchase price to consist of a cash payment of $5,877. The net book value for the related assets, consisting of inventory and property and equipment, was $1,029 bringing the net gain recognized to $4,848. The sale transaction closed on June 28, 2013. The Company determined that this sale did not qualify for discontinued operations reporting.

In the fourth quarter of fiscal year 2014, we completed the sale of two assets/businesses that individually and in the aggregate were not significant. The aggregate sales price of these two transactions was $3,030, plus other consideration in the form of a note receivable for $1,241. The net book value of these assets/businesses was $3,781 bringing the net gain recognized to $490.

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3.	ACQUISITIONS

The purchase price for business combinations is allocated to the estimated fair values of acquired tangible and intangible assets and assumed liabilities, including goodwill, where applicable. Additionally, we generally recognize customer relationships, trademarks and non-competition agreements as identifiable intangible assets. The assets are recorded at fair value as of the transaction date. The fair value of these intangibles is determined primarily using the income approach, which involves significant unobservable inputs (Level 3 inputs). These inputs include projected sales, margin, required rate of return and tax rate.

On February 9, 2012, we acquired the operating assets of the postconsumer recycled raw material processing operation of Corkery Industries, Inc. (“Corkery”) to enhance the supply of nonvirgin resin in our Midwest region, thereby reducing the risk of future supply disruption. The purchase price of Corkery was $6,225 in cash. The acquisition was financed through our existing line of credit facility. The results of operations of Corkery are included in our Consolidated Statements of Income as of February 9, 2012 and thereafter. The revenue and net income of Corkery since the acquisition date included in our Consolidated Statements of Income for the fiscal year ended March 31, 2012 were immaterial.

The purchase price allocation to the net assets was finalized and determined based on fair value. The net assets acquired at the date of acquisition are summarized as follows:


(Amounts in thousands)
Inventory	$	395
Equipment		1,897
Intangible assets		3,920
Goodwill		13

Total net assets acquired	$	6,225

The acquired intangible assets represent developed technology of $769 (10-year useful life), noncompete agreements of $360 (five-year useful life), and vendor relationships of $2,791 (seven-year useful life). The $13 of goodwill is deductible for tax purposes.

On March 9, 2012, we acquired the operating assets of the high-density polyethylene (“HDPE”) pipe business of Quality Culvert, Inc. (“Quality”), to grow our market share. The purchase price of the Quality was $39,000 in cash. The acquisition was financed through our existing line of credit facility. The results of operations of Quality are included in our Consolidated Statements of Income as of March 9, 2012 and thereafter. The revenue and net income of Quality since the acquisition date in our Consolidated Statements of Income for the fiscal year ended March 31, 2012 was immaterial.

The purchase price allocation to the net assets was finalized and determined based on fair value. The net assets acquired at the date of acquisition are summarized as follows:


(Amounts in thousands)
Equipment	$	8,419
Intangible assets		14,090
Goodwill		16,491

Total net assets acquired	$	39,000

The acquired intangible assets represent customer relationships of $10,200 (seven-year useful life), developed technology of $2,800 (10-year useful life), and noncompete agreements of $1,090 (five-year useful life). The $16,491 of goodwill is deductible for tax purposes.

In fiscal year 2013, we completed the acquisition of two businesses that individually and in the aggregate were not significant. The aggregate purchase price of these acquisitions was $5,239, which included a note payable of $400 plus additional contingent consideration with an initial estimated fair value of $1,271. The consolidated financial statements include the results of operations from these business combinations from the date of each acquisition.

F-18

The following table contains unaudited pro forma Consolidated Statements of Income information assuming the acquisitions of Quality and Corkery occurred on April 1, 2010 and includes adjustments for amortization of intangibles and interest expense. This pro forma information is presented for illustrative purposes only and is not indicative of what actual results would have been if the acquisitions had taken place on April 1, 2010 or of future results.


(Amounts in thousands)	2011		2012
Net sales	$	890,081	$	1,041,960
Net income attributable to ADS		6,363		43,739

Unaudited pro forma net income attributable to ADS has been calculated after adjusting the combined results of the Company to reflect additional intangible asset amortization expense, net of related income taxes, of $1,716 and additional interest expense, net of related income taxes, of $1,177 for the fiscal year ended March 31, 2011. Unaudited pro forma net income attributable to ADS has been calculated after adjusting the combined results of the Company to reflect additional intangible asset amortization expense, net of related income taxes, of $1,278 and additional interest expense, net of related income taxes, of $1,101 for the fiscal year ended March 31, 2012.

In fiscal year ended March 31, 2012, we incurred $2,092 of transaction costs, respectively. In the fiscal years ended March 31, 2013 and 2014, transaction costs were immaterial. These costs are included in General and administrative expenses in our Consolidated Statements of Income. The transaction costs for the fiscal year ended March 31, 2012 by transaction were as follows:


(Amounts in thousands)	2012
Sale of septic chamber business (Note 2)	$	1,823
Quality		187
Corkery		82

Total transaction costs	$	2,092

4.	PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment — net as of the fiscal years ended March 31 consisted of the following:


(Amounts in thousands)	2013			2014
Land, buildings and improvements	$	149,974		$	151,088
Machinery and equipment		504,853			532,468

Total cost		654,827			683,556
Less accumulated depreciation		(359,926	)		(391,474	)

Property, plant and equipment — net	$	294,901		$	292,082

The following table sets forth depreciation expense in each of the fiscal years ending March 31:


(Amounts in thousands)	2012		2013		2014
Depreciation expense	$	41,742	$	37,490	$	37,276

5.	INVENTORIES

Inventories as of the fiscal years ended March 31 consisted of the following:


(Amounts in thousands)	2013		2014
Raw materials	$	45,455	$	52,267
Finished goods		186,954		208,033

Total inventory	$	232,409	$	260,300

We had no work-in-process inventories as of March 31, 2013 and 2014.

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6.	GOODWILL AND INTANGIBLE ASSETS

Goodwill

The carrying amount of goodwill by reportable segment is as follows:


(Amounts in thousands)	Domestic		International		Total
Balance at April 1, 2012	$	85,702	$	—	$	85,702
Acquisitions		—		532		532
Currency translation		—		25		25

Balance at March 31, 2013		85,702		557		86,259
Currency translation		—		38		38

Balance at March 31, 2014	$	85,702	$	595	$	86,297

Intangible Assets

As discussed in Note 1, in April 2011, the Company recharacterized the Hancor trademark previously classified as indefinite lived since 2005, to definite lived based on management’s decision to discontinue the use of the trademark over the next 15 years.

Intangible assets as of the fiscal years ended March 31, 2013 and 2014 consisted of the following:


(Amounts in thousands)	2013							2014
	Gross Intangible		Accumulated Amortization			Net Intangible		Gross Intangible		Accumulated Amortization			Net Intangible
Definite-lived intangible assets
Developed technology	$	40,579	$	(18,773	)	$	21,806	$	40,579	$	(22,588	)	$	17,991
Customer lists		39,252		(17,178	)		22,074		39,252		(22,079	)		17,173
Patents		5,669		(2,293	)		3,376		6,175		(2,921	)		3,254
Contract agreements		11,493		(2,320	)		9,173		11,493		(4,280	)		7,213
Trademarks		12,857		(2,585	)		10,272		12,857		(4,294	)		8,563

Total definite-lived intangible assets		109,850		(43,149	)		66,701		110,356		(56,162	)		54,194
Indefinite-lived intangible assets
Trademarks		12,016		—			12,016		11,990		—			11,990

Total intangible assets	$	121,866	$	(43,149	)	$	78,717	$	122,346	$	(56,162	)	$	66,184

The following table presents the weighted average amortization period for definite-lived intangible assets at March 31, 2014:


	Weighted Average Amortization Period (in years)
Definite-lived intangible assets
Developed technology		10.7
Customer lists		8.4
Patents		8.9
Contract agreements		6.8
Trademarks		15.0

The following table sets forth amortization expense in each of the fiscal years ended March 31:


(Amounts in thousands)	2012		2013		2014
Amortization expense	$	13,429	$	18,115	$	18,622

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The following table presents the future intangible asset amortization expense based on existing intangible assets at March 31, 2014:


	Fiscal Year
(Amounts in thousands)	2015		2016		2017		2018		2019		Thereafter		Total
Amortization Expense	$	11,361	$	9,192	$	8,216	$	7,274	$	5,858	$	12,293	$	54,194

7.	FAIR VALUE MEASUREMENT

When applying fair value principles in the valuation of assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company has not changed its valuation techniques used in measuring the fair value of any financial assets or liabilities during the fiscal years presented. Our fair value estimates take into consideration the credit risk of both the Company and our counterparties.

When active market quotes are not available for financial assets and liabilities, we use industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including credit risk, interest rate curves, foreign currency rates and forward and spot prices for currencies. In circumstances where market-based observable inputs are not available, management judgment is used to develop assumptions to estimate fair value. Generally, the fair value of our Level 3 instruments is estimated as the net present value of expected future cash flows based on internal and external inputs.

Recurring Fair Value Measurements

The assets, liabilities and mezzanine equity carried at fair value as of the fiscal years ended March 31 were as follows:


	2013
(Amounts in thousands)	Total			Level 1		Level 2		Level 3
Assets:
Derivative assets — diesel fuel contracts	$	55		$	—	$	55	$	—

Total assets at fair value on a recurring basis	$	55		$	—	$	55	$	—

Liabilities & Mezzanine Equity:
Derivative liability — interest rate swaps	$	1,082		$	—	$	1,082	$	—
Derivative liability — currency forwards		3			—		3		—
Contingent consideration for acquisitions		2,535			—		—		2,535
Redeemable Common Stock		522,276			—		—		522,276
Redeemable Convertible Preferred Stock		282,547			—		—		282,547
Deferred compensation — unearned ESOP shares		(196,477	)		—		—		(196,477	)

Total liabilities and mezzanine equity at fair value on a recurring basis	$	611,966		$	—	$	1,085	$	610,881

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	2014
(Amounts in thousands)	Total			Level 1		Level 2		Level 3
Assets:
Derivative assets — propylene swaps	$	27		$	—	$	27	$	—

Total assets at fair value on a recurring basis	$	27		$	—	$	27	$	—

Liabilities & Mezzanine Equity:
Derivative liability — interest rate swaps	$	1,001		$	—	$	1,001	$	—
Contingent consideration for acquisitions		2,276			—		—		2,276
Redeemable Common Stock		549,119			—		—		549,119
Redeemable Convertible Preferred Stock		291,720			—		—		291,720
Deferred compensation — unearned ESOP shares		(197,888	)		—		—		(197,888	)

Total liabilities and mezzanine equity at fair value on a recurring basis	$	646,228		$	—	$	1,001	$	645,227

Changes in the fair value of recurring fair value measurements using significant unobservable inputs (Level 3) for the fiscal years ended March 31, 2013 and 2014 were as follows (amounts in thousands):


Balance as of April 1, 2012	$	558,896
Change in estimate of contingent consideration		(269	)
Contingent consideration recognized for 2013 acquisition		1,471
Allocation of ESOP shares to participants		7,675
Redemption of Redeemable Convertible Preferred Stock		(3,031	)
Change in fair value related to items recorded in mezzanine equity		46,139

Balance as of March 31, 2013		610,881

Change in estimate of contingent consideration		(259	)
Allocation of ESOP shares to participants		8,211
Redemption of Redeemable Convertible Preferred Stock		(4,428	)
Reclassification of common stock to Redeemable Common Stock		385
Change in fair value related to items recorded in mezzanine equity		30,437

Balance as of March 31, 2014	$	645,227

For the fiscal years ended March 31, 2013 and 2014 there were no transfers in or out of Levels 1, 2, and 3.

Valuation of our Contingent Consideration for Acquisitions

The fair values of the contingent consideration payables were calculated with reference to the estimated future value of the Inserta Tee and Flexstorm businesses, which are based on a discounted cash flow model. The undiscounted value is discounted at the present value using a market discount rate. The categorization of the framework used to price this liability is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

Valuation of our Redeemable Common Stock

The Company has certain shares of common stock outstanding whereby the holder may put its shares to us for cash. This Redeemable Common Stock is recorded at its fair value in the mezzanine equity section of our Consolidated Balance Sheets and changes in fair value are recorded in Retained earnings. Historically, the fair value of a share of common stock was determined by Management by applying industry-appropriate multiples to EBITDA and performing a discounted cash flow analysis. Under the industry-appropriate multiples approach, to arrive at concluded multiples, we considered differences between the risk and return characteristics of ADS and the guideline companies. Under the discounted cash flow analysis, the cash

F-22

flows expected to be generated by the Company are discounted to their present value equivalent using a rate of return that reflects the relative risk of an investment in ADS, as well as the time value of money. This return is an overall rate based upon the individual rates of return for invested capital (equity and interest-bearing debt). The return, known as the weighted average cost of capital (“WACC”), is calculated by weighting the required returns on interest-bearing debt and common stock in proportion to their estimated percentages in an expected capital structure. The WACC used was 12.5% and 11.0% as of March 31, 2013 and 2014, respectively. An increase in the WACC would decrease the fair value of the Redeemable Common Stock. The categorization of the framework used to price this temporary equity is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

Valuation of our Redeemable Convertible Preferred Stock

The Trustee of the Company’s ESOP has the ability to put the shares of our Redeemable Convertible Preferred Stock to the Company. Our Redeemable Convertible Preferred Stock is recorded at its fair value in the mezzanine equity section of our Consolidated Balance Sheets and changes in fair value are recorded in Retained earnings. Accordingly, we estimated the fair value of the Redeemable Convertible Preferred Stock through estimating the fair value of the Company’s common stock and applying certain adjustments including for the fair value of the total dividends to be received and assuming conversion of the preferred stock to common stock at the stated conversion ratio per our Articles of Incorporation. The categorization of the framework used to price this temporary equity is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

Please refer to Note 16, Mezzanine Equity, for additional information on the Redeemable Common Stock and Redeemable Convertible Preferred Stock.

Nonrecurring Fair Value Measurements

Goodwill and indefinite lived intangible assets are tested for impairment annually as of March 31 or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. Note 1 discusses the valuation techniques, including the estimates and assumptions used in those valuations, used to value the goodwill and indefinite lived intangibles. As discussed in Note 1, when the Company recharacterized the Hancor trademark previously classified as indefinite lived to definite lived, an impairment charge of $3,200 was recorded, resulting in the carrying value of the trademark being reduced, and thus equal, to the estimated fair value of $11,947. The categorization of the framework used to price these assets is considered a Level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

8.	VARIABLE INTEREST ENTITIES

The accounting model for VIEs described in ASC 810-10 considers if a company has a controlling financial interest in a VIE. A controlling financial interest will have both (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of a VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could be potentially significant to the VIE. Entities are required to consolidate a VIE when it is determined that they have a controlling financial interest in a VIE and therefore, are the primary beneficiary of that VIE. In determining whether we are the primary beneficiary of a VIE, we consider factors such as voting rights including kick-out rights, whether we have the power to direct the VIE’s significant activities, variable interests held by related parties and other factors. We believe that significant assumptions and judgments were applied consistently.

We participate in joint ventures from time to time for the purpose of expanding upon our growth of manufacturing and selling HDPE corrugated pipe in emerging markets. Our investments in these joint ventures may create a variable interest in a VIE, depending upon the contractual terms of the arrangement.

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One of our joint ventures, ADS Mexicana, was determined to be a VIE. In April 2013, ADS Worldwide acquired an additional 1% equity interest in its consolidated subsidiary ADS Mexicana stock for $520, increasing the Company’s ownership percentage to 51% from 50%. We invest in this VIE for the purpose of expanding upon our growth of manufacturing and selling ADS licensed HDPE corrugated pipe and related products in the Mexican and Central American markets via the joint venture partner’s local presence and expertise throughout the region. We have executed a Technology, Patents and Trademarks Sub-License Agreement and a Distribution Agreement with ADS Mexicana that provides ADS Mexicana with the rights to manufacture and sell ADS licensed products in Mexico and Central America. We are the guarantor of 100% of ADS Mexicana’s credit facility and our maximum potential payment under this guarantee totals $12,000. We have concluded that we hold a variable interest in and are the primary beneficiary of ADS Mexicana based on our power to direct the most significant activities of ADS Mexicana and our obligation to absorb losses and our right to receive benefits that could be significant to ADS Mexicana. As the primary beneficiary, we are required to consolidate the assets and liabilities of ADS Mexicana. The equity owned by our joint venture partner is shown as Noncontrolling interest in subsidiaries in our Consolidated Balance Sheets and our joint venture partner’s portion of net income is shown as Net income attributable to noncontrolling interest in our Consolidated Statements of Income.

The table below includes the assets and liabilities of ADS Mexicana that are consolidated as of March 31, 2013 and 2014. The balances exclude intercompany transactions that are eliminated upon consolidation.


(Amounts in thousands)
	2013		2014
Assets
Current assets	$	33,252	$	35,272
Property, plant and equipment, net		23,655		21,633
Other noncurrent assets		3,144		2,698

Total assets	$	60,051	$	59,603


	2013		2014
Liabilities
Current liabilities	$	9,777	$	9,090
Noncurrent liabilities		2,283		1,240

Total liabilities	$	12,060	$	10,330

9.	INVESTMENT IN UNCONSOLIDATED AFFILIATES

We participate in two unconsolidated joint ventures, Tuberias Tigre — ADS Limitada (“Tigre ADS”), which is 50%-owned by our wholly-owned subsidiary ADS Chile, and BaySaver Technologies, LLC (“BaySaver”), which is 55% owned by our wholly-owned subsidiary ADS Ventures, Inc.

Tigre ADS

Our investment in this unconsolidated joint venture was formed for the purpose of expanding upon our growth of manufacturing and selling HDPE corrugated pipe in the South American market via the joint venture partner’s local presence and expertise throughout the region. We are the guarantor for 50% of Tigre ADS’ credit facility, and the debt guarantee is shared equally with the joint venture partner. Our maximum potential payment under this guarantee totals $7,000. We are not required to consolidate Tigre ADS under ASC 810-10 as we are not the primary beneficiary, although we do hold a significant variable interest in Tigre ADS through our equity investment and debt guarantee. The results of Tigre ADS are accounted for in the consolidated financial statements using the equity method of accounting. Our share of the income of this joint venture is reported in the Consolidated Statements of Income under Equity in net (income) loss of unconsolidated affiliates. Our investment in this joint venture is included in Other assets in the Consolidated Balance Sheets.

F-24

Summarized financial data as of the fiscal years ended March 31 for the Tigre ADS joint venture is as follows:


	2013				2014
(Amounts in thousands)	As reported on Balance Sheet		Maximum Exposure		As reported on Balance Sheet		Maximum Exposure
Investment in Tigre ADS	$	22,012	$	22,012	$	20,029	$	20,029
Receivable from Tigre ADS		8,113		8,113		8,899		8,899
ADS’ Guarantee of Tigre ADS Debt		—		7,000		—		7,000

BaySaver

On July 15, 2013, ADS Ventures, Inc., a wholly-owned subsidiary of the Company, BaySaver Technologies, Inc. (“BTI”) and Mid Atlantic Storm Water Research Center, Inc. (“MASWRC”) entered into an LLC agreement to form a new joint venture, BaySaver. The joint venture was established to design, engineer, manufacture, market and sell water quality filters and separators used in the removal of sediment and pollution from storm water anywhere in the world except New Zealand, Australia and South Africa. The Company contributed $3,500 in cash, $1,285 in inventory, and other intangible assets with no carrying value, in exchange for a 55% equity interest and a 50% voting interest in BaySaver. We are not required to consolidate BaySaver under ASC 810-10 as we are not the primary beneficiary, although we do hold a significant variable interest in BaySaver through our equity investment. The Company accounts for its investment in BaySaver under the equity method of accounting. In connection with this investment, the Company acquired a call option to purchase the remaining 45% interest in BaySaver. Also, in connection with the investment, the Company granted a put option enabling the other equity holder to sell his remaining shares in BaySaver back to the Company upon the passage of time or the occurrence of certain events. Our share of the income of this joint venture is reported in the Consolidated Statements of Income under Equity in net (income) loss of unconsolidated affiliates. Our investment in this joint venture is included in Other assets in the Consolidated Balance Sheets.

Summarized financial data as of the fiscal year ended March 31 for the BaySaver joint venture is as follows:


	2014
(Amounts in thousands)	As reported on Balance Sheet		Maximum Exposure
Investment in BaySaver	$	5,202	$	5,202
Receivable from BaySaver		6		6

Our share of the income of this joint venture is decreased by amortization expense relating to the basis difference between our cost basis in the investment and the basis reflected at the joint venture level. This basis difference is being recorded over the lives of the underlying assets which gave rise to the basis difference, which is 10 years. The unrecorded basis difference as of March 31, 2014 is $1,837.

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10.

DEBT

Long-term debt as of the fiscal years ended March 31 consisted of the following:


(Amounts in thousands)	2013			2014
a. Bank term loans:
Revolving Credit Facility — ADS	$	186,100		$	248,100
Revolving Credit Facility — ADS Mexicana		1,000			—
Term note		77,500			97,500
b. Senior Notes payable		75,000			100,000
c. Mortgage notes payable		4,200			3,733
d. Industrial revenue bonds		6,190			4,715

Total		349,990			454,048
Current maturities		(11,942	)		(11,153	)

Long-term debt obligation	$	338,048		$	442,895

Revolving Credit Facility:

The current ADS Revolving Credit Agreement (the “Revolving Credit Facility”) has been in place with several banks and was refinanced on June 12, 2013. The current bank credit facility expires in June 2018. Additionally, on December 20, 2013, we amended the private shelf agreement primarily to make certain amendments in order to permit the payment of a special dividend of $7.50 per share (“Special Dividend,” as discussed in Notes 13 and 15), which was financed in full through the Revolving Credit Facility.

The new Revolving Credit Facility agreement increased the upper limit of the Revolving Credit Facility to $325,000 for ADS, Inc. and $12,000 for ADS Mexicana. The company also entered into a five-year, $100,000 term note. Both the Revolving Credit Facility and the term note share the same interest rate structure.

The Revolving Credit Facility interest rate is variable and depends upon the Company’s “pricing ratio” as defined in the agreement. The interest rate is derived from the London InterBank Offered Rate (LIBOR) or alternate base rate (Prime Rate) based upon the Company’s option. The average rate at March 31, 2014, was 2.301%. Any letters of credit outstanding reduce the availability on the revolver. The Company had outstanding letters of credit at March 31, 2014, in the amount of $8,505. The amount available for borrowing for ADS, Inc. was $68,395, plus $12,000 available under a separate revolving credit facility with our subsidiary, ADS Mexicana, at March 31, 2014.

Per terms of the new Revolving Credit Facility, ADS is not required to hedge its interest exposure using interest rate swaps; however, it is currently the objective of ADS, Inc. to manage its exposure to variable rate debt. On October 7, 2010, ADS executed two Spot Interest Rate Swaps on the 90-Day LIBOR interest rate. One hedge is related to the $100,000 Term Debt which was part of the previous credit agreement. This fixed rate swap exchanges a fixed rate of 1.105% for a period of four years, expiring on September 1, 2014. The second hedge on the Credit Facility executed on October 7, 2010 was for $50,000 for a period of three years at a fixed rate of 0.890% and expired on September 1, 2013.

On July 18, 2013, ADS executed two Forward Interest Rate Swaps on the 30-Day LIBOR interest rate. One swap was for $50,000 on the Revolving Credit Facility starting on September 3, 2013 at a fixed rate of 0.86% for a period of three years, expiring on September 1, 2016. The second swap executed on July 18, 2013 was for $50,000 on the Revolving Credit Facility starting on September 2, 2014 at a fixed rate of 1.08% for a period of two years, expiring on September 1, 2016.

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Senior Notes payable:

In December 2009, we signed an agreement with Prudential Investment Management, Inc., for the issuance of senior promissory notes (“Senior Notes”), for an aggregate amount of up to $100,000. We may make requests for purchases of the Senior Notes during the “Issuance Period,” defined as a three-year period beginning with the date of the agreement. The minimum purchase amount of Senior Notes is $10,000. Each Senior Note issued has a maximum term of no more than 10 years from the date of issuance. Interest is payable quarterly and is fixed at 5.6%. The rate is subject to an additional 200 basis point excess leverage fee if calculated leverage exceeds 3 to 1. A principal payment of $25,000 is due in each of fiscal years 2017, 2018, and 2019.

In July 2013, ADS issued an additional $25,000 of senior promissory notes (“Senior Notes”) with Prudential Investment Management, Inc. Interest is payable quarterly and is fixed at 4.05%. The rate is subject to an additional 200 basis point excess leverage fee if calculated leverage exceeds 3 to 1. A principal payment of $25,000 is due in September of the fiscal year 2020.

Mortgage notes payable:

Two mortgage notes payable require monthly installments through 2015. One note has a variable interest rate of 2.903% at March 31, 2014 (New Miami, Ohio), and one note has a fixed rate of 5.1% (Hilliard, Ohio). In January 2012, a third mortgage was paid off (Ludlow, Massachusetts) at 6%. Land and buildings with a net book value of approximately $8,637 at March 31, 2014, collateralize the two mortgage notes.

Industrial revenue bonds:

ADS issued industrial revenue bonds for the construction of four production facilities. The original bond values of $27,300 require periodic principal and interest payments through fiscal year 2019. During fiscal year 2011, two of the four bonds were retired, leaving a remaining combined principal of $4,715 at March 31, 2014. The interest rates on the two remaining bonds are variable and are computed on a weekly basis. These bonds are not considered auction rate securities. The average rate on these bonds at March 31, 2014, was 3.356%, including a letter of credit fee of 3.25%. Land and buildings with a net book value of approximately $14,778 at March 31, 2014, collateralize the bonds.

The Revolving Credit Facility agreement and the Senior Notes require, among other provisions, that we (1) maintain a minimum fixed charge ratio; (2) maintain a minimum leverage ratio; and (3) establish certain limits on permitted transactions, principally for indebtedness, capital distributions, loans and investments, and acquisitions and dispositions of assets. Capital distributions are limited to $50 million in any fiscal year if the pro-forma leverage ratio exceeds 3.0 to 1.

Maturities of long-term debt (excluding interest) as of March 31, 2014 are summarized below (amounts in thousands):


	Fiscal Years Ending March 31,
(Amounts in thousands)	2015		2016		2017		2018		2019		Thereafter		Total
Principal maturities	$	11,153	$	9,580	$	35,870	$	35,905	$	336,540	$	25,000	$	454,048

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11.

DERIVATIVE TRANSACTIONS

The Company uses interest rate swaps, commodity options in the form of collars and swaps, and foreign currency forward contracts to manage its various exposures to interest rate, commodity price, and exchange rate fluctuations. For interest rate swaps, the difference between the spot rate and applicable base rate is recorded in interest expense. For collars, commodity swaps and forward contracts, contract settlement gains and losses are recorded in the Consolidated Statements of Income in Cost of goods sold. Gains and losses related to the mark-to-market adjustments for changes in fair value of the derivative contracts are recorded in the Consolidated Statements of Income as Other miscellaneous expense, net. The Company recognized (gains) and losses on mark-to-market adjustments for changes in fair value on derivative contracts of $2,315, $(4) and $(53) for the fiscal years ending March, 31, 2012, 2013 and 2014, respectively.

A summary of the fair values for the various derivatives at March 31, 2013 and 2014 is presented below:


	2013					2014
(Amounts in thousands)	Asset		(Liability)			Asset		(Liability)
Interest rate swaps	$	—	$	(1,082	)	$	—	$	(1,001	)
Diesel fuel option collars		55		—			—		—
Foreign exchange forward contracts		—		(3	)		—		—
Propylene swaps		—		—			27		—

12.

COMMITMENTS AND CONTINGENCIES

Leases

We lease real estate, transportation, and office equipment under various noncancelable operating lease agreements that expire at various dates through fiscal year 2037.

Future minimum rental commitments under these leases as of March 31, 2014, are summarized below (amounts in thousands):


	Fiscal Years Ending March 31,
(Amounts in thousands)	2015		2016		2017		2018		2019		Thereafter		Total
Transportation equipment leases	$	13,115	$	11,475	$	8,693	$	4,924	$	1,376	$	3,187	$	42,770
Real estate leases and other		5,252		4,356		3,094		2,160		1,367		4,894		21,123

Total	$	18,367	$	15,831	$	11,787	$	7,084	$	2,743	$	8,081	$	63,893

Total rent expense was $16,745, $20,513, and $22,673 in the fiscal years ended March 31, 2012, 2013 and 2014, respectively.

Purchase Commitments

At March 31, 2014, commitments for the purchase of major property, plant, and equipment totaled approximately $14,048.

We will, from time to time, secure supplies of resin raw material by agreeing to purchase quantities during a future given period at a fixed price. These purchase contracts are short term in nature and occur in the ordinary course of business. Under such purchase contracts, we have agreed to purchase 84,000 pounds of resin over the period April 2014 through December 2014 at a committed purchase cost of $55,823.

Litigation

We have been named as a defendant in various litigation matters. Management intends to vigorously defend these outstanding claims. We believe we have adequate accrued loss contingencies and that current or threatened litigation matters will not have a material adverse impact on our consolidated results of operations or consolidated financial condition. Management estimates the maximum loss contingency is $448 and $420 at March 31, 2013 and 2014, respectively.

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13.

EMPLOYEE BENEFIT PLANS

Employee Stock Ownership Plan (ESOP)

We established the Advanced Drainage Systems, Inc. ESOP (the “ESOP”) on April 1, 1993. The Plan was funded through a contribution from our profit-sharing plan, as well as a 30-year term loan from ADS. The Plan operates as a qualified leveraged ESOP and was designed to enable eligible employees to acquire stock ownership interest in ADS. Employees of ADS who have reached the age of 18 are generally eligible to participate in the Plan after six months of service. Upon retirement, disability, death, or vested terminations, a participant or designated beneficiary may elect to receive the amount in their account in the form of cash or ADS stock with any fractional shares paid in cash. Upon attainment of age 50 and seven years of participation in the Plan, a participant may elect to diversify, via redemptions, 25% of the number of shares of ADS stock credited to the participant’s ESOP stock account.

We are obligated to make contributions to the Plan, which, when aggregated with the Plan’s dividends and interest earnings, equal the amount necessary to enable the Plan to make its regularly scheduled payments of principal and interest due on its term loan to ADS. As the Plan makes annual payments of principal and interest, an appropriate percentage of preferred stock is allocated to eligible employees’ accounts in accordance with applicable regulations under the Internal Revenue Code.

Required dividends on allocated shares are paid in cash to the participants and required dividends on unallocated shares are paid in cash to the Plan and used to service the Plan’s debt.

On January 6, 2014, the Board of Directors declared a Special Dividend of $7.50 per share, for a total amount of approximately $108,101, on all outstanding shares of our common stock and Redeemable Convertible Preferred Stock. We paid the Special Dividend on January 15, 2014 to all stockholders of record on January 2, 2014. The January 15, 2014 Special Dividend on the ESOP’s allocated shares was paid in cash (i.e., passed through) to participants, and the Special Dividend on the ESOP’s unallocated shares was retained by the ESOP and allocated among the participants’ ESOP cash accounts. The allocation of cash among the participants’ ESOP cash accounts related to dividends paid on unallocated shares resulted in additional compensation expense for the fiscal year ended March 31, 2014 of $22,624, of which $13,896 was included in Cost of sales, $4,550 was included in Selling expenses, and $4,178 was included in General and administrative expenses in the Consolidated Statements of Income.

In fiscal years ended March 31, 2013 and 2014, the ESOP committee directed the Plan trustee to keep $1,251 and $23,614, respectively, in dividends on unallocated shares rather than to service the Plan’s debt. These dividends were allocated to participants based on total shares in their account in relation to total shares allocated at March 31, 2013 and 2014.

In fiscal years ended March 31, 2013 and 2014, the Board of Directors approved the allocation of 153 and 156 shares of Redeemable Convertible Preferred Stock, respectively, to the ESOP participants, including, in addition to the cash dividends, 2 and 2 preferred shares allocated as dividends, respectively. See Note 16 for further details on the shares of Redeemable Convertible Preferred Stock held by our ESOP.

Profit-Sharing Plan

We have an employee profit-sharing plan covering substantially all eligible employees. We did not declare a contribution in fiscal years ended March 31, 2012, 2013 and 2014 to the profit-sharing plan.

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14.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in the balances of each component of Accumulated other comprehensive loss (“AOCI”) for the fiscal years ended March 31:


(Amounts in thousands)	Currency Translation			Other			Accumulated Other Comprehensive Loss
Balance at April 1, 2011	$	(1,449	)	$	2		$	(1,447	)

Other comprehensive loss before reclassifications		(38	)		44			6
Amounts reclassified from AOCI		—			—			—
Tax expense/(benefit)		83			(17	)		66

Balance at March 31, 2012		(1,404	)		29			(1,375	)

Other comprehensive loss before reclassifications		842			(41	)		801
Amounts reclassified from AOCI		—			—			—
Income tax expense/(benefit)		(298	)		16			(282	)

Balance at March 31, 2013	$	(860	)	$	4		$	(856	)

Other comprehensive loss before reclassifications		(6,895	)		6			(6,889	)
Amounts reclassified from AOCI		—			—			—
Income tax expense/(benefit)		1,770			(2	)		1,768

Balance at March 31, 2014	$	(5,985	)	$	8		$	(5,977	)

15.

STOCKHOLDERS’ EQUITY

The common stockholders have entered into an agreement that grants ADS the right of first refusal to purchase shares in the event of death, disability, or termination of certain management stockholders.

The Board of Directors approved a quarterly per share cash dividend of $0.11 and $0.12 to all common stockholders of record during the fiscal years ended March 31, 2012 and 2013, respectively. The Board of Directors approved quarterly per share cash dividends of $0.135 during the first three quarters of the fiscal year and a per share cash dividend of $7.50 (the “Special Dividend”) during the fourth quarter to all common stockholders of record. Total cash dividends paid on common stock during fiscal years ended March 31, 2012, 2013 and 2014 were $4,367, $4,817 and $80,102, respectively.

On January 6, 2014, the Board of Directors declared a Special Dividend of $7.50 per share for a total amount of approximately $108,101, on all outstanding shares of our common stock and Redeemable Convertible Preferred Stock. We paid the Special Dividend on January 15, 2014 to all stockholders of record on January 2, 2014. The payment of the Special Dividend was financed through the Company’s Revolving Credit Facility. For additional details on the Revolving Credit Facility, please refer to Note 10, Debt.

In fiscal years ended March 31, 2013 and 2014, we purchased 4 and 17 shares, respectively, from certain stockholders at a purchase price of $59.25 and $64.20 per share, respectively.

16.

MEZZANINE EQUITY

Redeemable Common Stock

One of our minority equity owners along with other shareholders who hold ownership in ADS of at least 15% (referred to as “Major Shareholders”) entered into an agreement which provides the Major Shareholders the right to put their common stock to the Company at fair value if, following the fifth anniversary of the recapitalization that occurred during 2010, a Major Shareholder demands that the Company effect an initial public offering (“IPO”) covering the registration of at least $50 million of securities, and either the Company advises the Major Shareholder that ADS will not begin preparations for

F-30

an IPO within 180 days after delivery, or after such preparations have begun they are discontinued (the “Major Shareholders’ Put Right”). As the Major Shareholders’ Put Right is a redemption right which is outside the control of ADS, we have classified common stock held by the Major Shareholders in the mezzanine equity section of our Consolidated Balance Sheets at its fair value, and changes in fair value are recorded in Retained earnings. As of March 31, 2013 and 2014, there were 8,135 and 8,141 shares, respectively, of common stock held by Major Shareholders.

Redeemable Convertible Preferred Stock

The Trustee of our ESOP has the ability to put the shares of preferred stock at fair value to the Company in the event that it needs cash to pay for distributions, pre-retirement diversification, or other expenses, causing the shares to be redeemable at the option of the holder. Given that this put right is outside the control of the Company, this results in the classification of our Redeemable Convertible Preferred Stock recorded in the mezzanine equity section of our Consolidated Balance Sheets at its fair value, and changes in fair value are recorded in Retained earnings. The Redeemable Convertible Preferred Stock has a required cumulative 2.5% dividend ($0.092 per share) and is convertible to common stock at a rate of one share for every 0.7692 share of common stock. We guarantee the value of the Redeemable Convertible Preferred Stock at $3.68 per share.

The Board of Directors approved the 2.5% annual dividend to be paid March 31 of each fiscal year to the stockholders of record as of March 15, 2012, 2013 and 2014. The annual dividend was paid in cash and stock on the allocated shares. In addition, the Board of Directors approved a quarterly per share discretionary cash dividend of $0.0846 and $0.0923 to all preferred stockholders of record during the fiscal years ended March 31, 2012 and 2013, respectively and quarterly per share discretionary cash dividends of $0.1038 per share during the first three quarters of the fiscal year ended March 31, 2014. Additionally, the Board of Directors approved a per share cash dividend of $7.50 (the Special Dividend) during the fourth quarter of fiscal 2014 to all redeemable convertible preferred stockholders of record on January 2, 2014. The discretionary dividend on unallocated shares of Redeemable Convertible Preferred Stock was allocated to participants rather than being used to service the Plan’s debt as described in Note 15.

Cash and stock dividends on Allocated Redeemable Convertible Preferred Stock for the fiscal years ended March 31, 2013 and 2014, respectively, are summarized in the following table. For additional information on dividends paid to the unallocated Redeemable Convertible Preferred Stock please refer to Note 13.


(Amounts in thousands)	2013		2014
Quarterly cash dividends	$	592	$	526
Annual cash dividends		34		32
Special Dividend		—		9,463

Total cash dividends		626		10,021

Annual stock dividend		110		118
Annual cash dividend		34		32

Total ESOP required dividends		144		150

Allocated shares		1,565		1,630
Required dividend per share		0.092		0.092

Required dividends	$	144	$	150

17.

STOCK COMPENSATION

Deferred Compensation — Unearned ESOP Shares

The fair value of Redeemable Convertible Preferred Stock held by the ESOP trust, but not yet earned by the ESOP participants or used for dividends, is reported as Deferred compensation — unearned ESOP shares within the mezzanine equity section of our Consolidated Balance Sheets.

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Compensation expense and related dividends paid with ESOP shares are recognized based upon the average annual fair value of the shares allocated. The shares allocated are for services rendered throughout the period and, therefore, a simple average is used to calculate average annual fair value. Deferred compensation — unearned ESOP shares are relieved at the fair value, with any difference between the annual average fair value and the fair value of shares when allocated being added to Additional paid in capital. The fair value of the shares allocated was $46.35, $50.10 and $52.55 per share of Redeemable Convertible Preferred Stock at March 31, 2012, 2013 and 2014, respectively, resulting in an average annual fair value per share of $42.95, $46.35 and $51.33 for the fiscal years ended March 31, 2012, 2013 and 2014, respectively. During the fiscal years ended March 31, 2012, 2013 and 2014, we recognized compensation expense of $4,957, $7,283 and $7,891, respectively, related to allocation of ESOP shares to participants for compensation.

Stock Options

Our 2000 stock option plan (“2000 Plan”) provides for the issuance of nonstatutory common stock options to management based upon the discretion of the Board of Directors. The plan generally provides for grants with the exercise price equal to fair value on the date of grant, which vest in three equal annual amounts beginning in year five and expire after 10 years from issuance. On an annual basis, management determines the fair value of the options with the assistance of an independent appraisal.

In August 2013, a new stock option plan (“2013 Plan”) was approved by the Board of Directors and provides for the issuance of up to 500 nonstatutory common stock options to management subject to the Board’s discretion. The plan generally provides for grants with the exercise price equal to fair value on the date of grant. The grants vest in five equal annual amounts beginning in year one and expire after 10 years from issuance. Options issued to the Chief Executive Officer vest equally over four years and expire after 10 years from issuance.

For both stock option plans, management determines the fair value of the options based on the Black-Scholes option pricing model. This methodology requires significant inputs including the fair value of our common stock, which is determined with the assistance of an independent appraisal performed by a reputable valuation firm (See Note 7 for further details of the determination of the fair value of our common stock and Redeemable Common Stock). During the fiscal years ended March 31, 2012, 2013 and 2014, we recognized total stock-based compensation expense under both plans of $811, $539 and $2,517, respectively, which was included with General and administrative expenses in our Consolidated Statements of Income. As of March 31, 2013 and 2014, there was a total of $597 and $6,884, respectively, of unrecognized compensation expense related to unvested stock option awards that will be recognized as an expense as the awards vest over the remaining service period. Of this amount, $0 and $2,383 relates to liability classified awards and $597 and $4,501 relates to equity classified awards as of March 31, 2013 and 2014, respectively. We had approximately 250 and 94 shares available for granting under the 2000 and 2013 plans, respectively, as of March 31, 2014.

We estimate the fair value of stock options granted after April 1, 2006 using a Black-Scholes option-pricing model, with assumptions as follows:


	2012			2013			2014
Expected stock price volatility		48	%		48	%		44	%
Risk-free interest rate		1.7			1.2			2.3
Weighted-average expected option life (years)		8			8			8
Dividend yield		0.87			0.81			0.84

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2000 Plan

The stock option transactions for the fiscal years ended March 31 are summarized as follows:


	2012							2013							2014
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at beginning of year		439		$	29.77		4.4		321		$	32.76		3.9		281		$	38.15		4.0
Issued		1			50.35				29			59.25				3			64.20
Exercised		(103	)		18.96				(69	)		23.00				(89	)		24.42
Forfeited		(16	)		42.51				—							(1	)		50.70

Outstanding at end of year		321			32.76		3.9		281			38.15		4.0		194			44.60		4.1

Exercisable and vested at year end		147			20.86		2.3		139			27.06		2.2		103			37.72		2.2

Unvested at year end		174			42.86		5.2		144			48.83		5.7		91			52.42		6.3

Vested and expected to vest at end of year		296			31.80		4.0		256			37.18		4.6		170			44.07		5.2

Fair value of options granted during the year				$	24.40						$	28.30						$	30.02

The following table summarizes information about the nonvested stock option grants as of the fiscal years ended March 31:


	2013					2014
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		174		$	24.35		144		$	21.42
Granted		29			28.30		3			30.02
Vested		(59	)		20.05		(56	)		25.84
Forfeited		—			—		—			—

Unvested at end of year		144		$	21.42		91		$	27.40

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2013 Plan

The stock option transactions for the fiscal year ended March 31, 2014 for the 2013 Plan are summarized as follows:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at beginning of year		—		$	—		—
Issued — equity classified		306			64.20
Issued — liability classified		110			64.20
Forfeited — equity classified		(10	)		64.20

Outstanding at end of year		406			64.20		9.42

Exercisable and vested at year end		—			—		—

Unvested at year end		406			64.20		9.42

Vested and expected to vest at end of year		362			64.20		9.42

Fair value of options granted during the year	$	29.29

The following table summarizes information about the nonvested stock option grants as of the fiscal year ended March 31, 2014:


	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		—		$	—
Granted		416			29.29
Vested		—			—
Forfeited		(10	)		—

Unvested at end of year		406		$	29.29

Restricted Stock

On September 16, 2008, the Board of Directors adopted the restricted stock plan for which restricted stock awards may be granted to certain key employees. The restricted stock will vest ratably over a five-year period from the original restricted stock grant date with the risk of forfeiture being stipulated only by the employees’ continuous employment by ADS. A portion of the grants vested immediately. Under the restricted stock plan, the vested shares granted are considered issued and outstanding. Employees with restricted stock have the right to dividends on the shares awarded (vested and unvested) in addition to voting rights on nonforfeited shares. The Company recognized compensation expense of $356, $1,462 and $1,849 in the fiscal years ended March 31, 2012, 2013 and 2014, respectively, relating to the issuance of these shares; of this amount, $316, $533 and $385 relates to the restricted shares that vested immediately during the fiscal years ended March 31, 2012, 2013 and 2014, respectively. We had approximately 71 shares available for granting under this plan as of March 31, 2014.

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The information about the unvested restricted stock grants as of March 31 is as follows:


	2012					2013					2014
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested at beginning of year		40		$	48.69		38		$	48.90		58		$	54.75
Granted		18			50.35		32			59.25		33			64.20
Vested		(18	)		47.97		(10	)		48.45		(22	)		55.45
Forfeited		(2	)		48.45		(2	)		49.07		(3	)		57.06

Unvested at end of year		38		$	48.90		58		$	54.75		66		$	58.35

We expect most, if not all, restricted stock grants to vest.

At March 31, 2013 and 2014, there was approximately $3,154 and $2,812, respectively, of unrecognized compensation expense related to the restricted stock that will be recognized over the remaining service period.

18.

INCOME TAXES

The components of Income before income taxes for the fiscal years ended March 31 are as follows:


(Amounts in thousands)	2012		2013		2014
United States	$	62,719	$	32,730	$	29,121
Foreign		8,072		13,955		7,920

Total	$	70,791	$	46,685	$	37,041

The components of the provision for income taxes for the fiscal years ended March 31 consisted of the following (amounts in thousands):


(Amounts in thousands)	2012			2013			2014
Current:
Federal	$	26,089		$	16,096		$	22,021
State and local		4,731			3,217			4,141
Foreign		1,800			2,385			1,347

Total current tax provision		32,620			21,698			27,509
Deferred:
Federal		(4,199	)		(3,828	)		(3,768	)
State and local		(766	)		(698	)		(1,800	)
Foreign		(591	)		(278	)		634

Total deferred tax benefit		(5,556	)		(4,804	)		(4,934	)

Total income tax provision	$	27,064		$	16,894		$	22,575

F-35

For the fiscal years ended March 31, our effective tax rate varied from the statutory Federal income tax rate as a result of the following factors:


(Amounts in thousands)	2012			2013			2014
Federal statutory rate		35.0	%		35.0	%		35.0	%
Redeemable Convertible Preferred Stock dividend		(0.3	)		(0.5	)		(9.3	)
ESOP stock appreciation		2.2			5.0			6.8
ESOP compensation for Special Dividend on unallocated shares		—			—			21.1
Effect of tax rate of foreign subsidiaries		(1.5	)		(4.4	)		0.3
State and local taxes – net of federal income tax benefit		3.6			3.0			2.7
Noncontrolling interest		(0.5	)		(1.5	)		(1.7	)
Uncertain tax position change		—			—			10.8
Qualified production activity credit		(2.4	)		(1.9	)		(4.6	)
Other		1.8			1.2			(0.2	)

Effective rate		37.9	%		35.9	%		60.9	%

The Company’s effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and the related tax rates in the jurisdictions where it operates, restructuring and other one-time charges, as well as discrete events, such as settlements of future audits. The increase in our effective tax rate for the fiscal year ended March 31, 2014 was primarily driven by the expected Special Dividend payment to participants in the ESOP Plan which increased our effective tax rate by 21.1%. Please refer to Notes 13 and 15 for additional information on the Special Dividend.

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31 were comprised of:


(Amounts in thousands)	2013		2014
Deferred tax assets:
State income taxes	$	3,915	$	3,285
ESOP loan repayment		1,529		1,493
Receivable and other allowances		1,631		1,055
Goodwill		2,428		3,304
Other assets and liabilities		2,676		6,250

Total deferred tax assets		12,179		15,387
Deferred tax liabilities:
Intangible assets		18,178		14,561
Property, plant and equipment		51,711		54,336
Inventory and other assets and liabilities		14,538		10,402

Total deferred tax liabilities		84,427		79,299

Net deferred tax liability	$	72,248	$	63,912

Net current deferred tax assets were included in Deferred income taxes and other current assets on the Consolidated Balance Sheets. The related balances at March 31 were as follows:


(Amounts in thousands)	2013		2014
Net current deferred tax assets	$	1,867	$	5,257

The Company has not provided for U.S. federal income taxes or foreign withholding taxes on approximately $32,450 of undistributed earnings of its foreign subsidiaries at March 31, 2014 because such earnings are intended to be reinvested indefinitely with the exception of cash dividends paid by our ADS Mexicana joint venture. It is not practicable to estimate the amount of U.S. tax that might be payable on the eventual remittance of such earnings.

F-36

Accounting for uncertain tax positions

A reconciliation of beginning and ending amount of unrecognized tax benefits for the years ended March 31, 2012, March 31, 2013 and 2014 is as follows:


(Amounts in thousands)
Balance as of March 31, 2012	$	1,615
Increases in tax positions in prior periods		—
Increases in current period tax positions		—
Lapse in statute of limitations		—
Settlement of uncertain tax positions with tax authorities		—

Balance as of March 31, 2013	$	1,615
Increases in tax positions in prior periods		1,369
Increases in current period tax positions		2,954
Lapse in statute of limitations		—
Settlement of uncertain tax positions with tax authorities		—

Balance as of March 31, 2014	$	5,938

The Company’s increase in tax positions is attributed to transfer pricing, ESOP and UNICAP.

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax. The Company has potential cumulative interest and penalties with respect to unrecognized tax benefits of approximately $395 as of March 31, 2014.

At March 31, 2014, the Company had unrecognized tax benefits of $4,888 that, if recognized, would affect the effective tax rate. The remaining unrecognized tax benefits related to tax position for which the ultimate deductibility is highly certain but for which there is uncertainty as to the timing of such deductibility. Recognition of these tax benefits would not affect our effective tax rate. We included the full amount of the unrecognized tax benefits in deferred income taxes and other liabilities in the consolidated balance sheets.

It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the Internal Revenue Service (“IRS”) or other taxing authorities, including proposed assessments of additional tax, possible settlement of audit issues (primarily IRS audit settlements for various fiscal years), reassessment of existing unrecognized tax benefits or the expiration of applicable statutes of limitations. We estimate that the range of the possible change in unrecognized tax benefits within the next 12 months is a net decrease of approximately zero to $500, exclusive of penalties and interest.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the fiscal years ended March 31, 2010 through March 31, 2013. The majority of the Company’s state income tax returns are open to audit under the statute of limitations for the years ended March 31, 2010 through March 31, 2013. The foreign income tax returns are open to audit under the statute of limitations for the years ended March 31, 2007 through March 31, 2011.

We have reviewed the application of the new Repair Regulations, and as of 3/31/14, have estimated that such regulations are not expected to have a material impact to the financial statements. The Company intends to be in compliance with these rules when they first apply, which will be the fiscal year ending March 31, 2015.

19.

NET INCOME (LOSS) PER SHARE AND UNAUDITED PRO FORMA NET INCOME (LOSS) PER SHARE

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the Net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net income (loss) per share is computed by dividing the Net income (loss) attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period.

F-37

Holders of unvested restricted stock have nonforfeitable rights to dividends when declared on common stock, and holders Redeemable Convertible Preferred Stock participate in dividends on an as-converted basis when declared on common stock. As a result, unvested restricted stock and Redeemable Convertible Preferred Stock meet the definition of participating securities, which requires us to apply the two-class method to compute both basic and diluted net income (loss) per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders.

The dilutive effect of stock options and unvested restricted stock is based on the more dilutive of the treasury stock method or the diluted two-class method. Diluted net income (loss) per share assumes the Redeemable Convertible Preferred Stock would be cash settled as we have the choice of settling in cash or shares, and we have demonstrated past practice and intent of cash settlement; therefore these shares are excluded from the calculation. For purposes of the calculation of diluted net income (loss) per share, stock options and unvested restricted stock are considered to be potential common stock and are only included in the calculations when their effect is dilutive.

The Company’s Redeemable Common Stock is included in the weighted-average number of common shares outstanding for calculating basic and diluted net income per share.

The following table presents information necessary to calculate net income (loss) per share for the fiscal years ended March 31, 2012, 2013, and 2014, as well as potentially dilutive securities excluded from the weighted average number of diluted common shares outstanding because their inclusion would have been anti-dilutive:


(Amounts in thousands, except per share data)	2012			2013			2014
NET INCOME (LOSS) PER SHARE — BASIC:
Net income attributable to ADS	$	43,260		$	28,159		$	11,124
Adjustment for:
Change in fair value of Redeemable Convertible Preferred Stock		(10,257	)		(5,869	)		(3,979	)
Dividends paid to Redeemable Convertible Preferred Stockholders		(668	)		(736	)		(10,139	)
Dividends paid to unvested restricted stockholders		(34	)		(52	)		(418	)

Net income (loss) available to common stockholders and participating securities		32,301			21,502			(3,412	)
Undistributed income allocated to participating securities		(3,241	)		(2,042	)		—

Net income (loss) available to common stockholders — Basic		29,060			19,460			(3,412	)
Weighted average number of common shares outstanding — Basic		9,835			9,921			10,044

Net income (loss) per common share — Basic	$	2.95		$	1.96		$	(0.34	)

NET INCOME (LOSS) PER SHARE — DILUTED:
Net income (loss) available to common stockholders — Basic	$	29,060		$	19,460		$	(3,412	)

Weighted average number of common shares outstanding — Basic		9,835			9,921			10,044
Assumed exercise of stock options		161			117			—

Weighted average number of common shares outstanding — Diluted		9,996			10,038			10,044

Net income (loss) per common share — Diluted	$	2.91		$	1.94		$	(0.34	)

Potentially dilutive securities excluded as anti-dilutive		4			17			19

Unaudited Pro Forma Net Income (Loss) Per Share

On January 6, 2014, the Board of Directors declared a Special Dividend of $7.50 per share, for a total amount of approximately $108,101, on all outstanding shares of our common stock and Redeemable Convertible Preferred Stock, which was financed through our Revolving Credit Facility. Additionally, we anticipate using a portion of the net proceeds from the offering to repay a portion of the amount borrowed under the Revolving Credit Facility used to fund the Special Dividend.

In accordance with the SEC Staff Accounting Bulletin (“SAB”) 1.B.3 and SAB 3.A, we are presented with two required calculations to present unaudited supplemental pro forma net income per share amounts, calculated in accordance with Article 11 of Regulation S-X, which are included in the Consolidated

F-38

Statement of Income for the Fiscal Year Ended March 31, 2014. These calculations include a methodology outlined in SAB 1.B.3 as a result of the Special Dividend which was declared in contemplation of the offering, which may be in excess of current period earnings, and the methodology outlined in SAB 3.A, as a result of the anticipation of a portion of the net proceeds from the offering being used to repay our Revolving Credit Facility. We assume SAB Topic 1B3 will be applicable, however, we will use the most dilutive of that or SAB Topic 3A.

The below table sets forth the computation of unaudited pro forma basic and diluted income (loss) per share as of March 31, 2014:


(Amounts in thousands, except per share data)	Basic	Diluted
PRO FORMA NET INCOME (LOSS) PER SHARE:
Net income (loss) available to common stockholders
Pro forma adjustment for:


Pro forma net income (loss) available to common stockholders
Weighted average number of common shares outstanding
Pro forma adjustment for:


Pro forma weighted average number of common shares outstanding

Pro forma net income (loss) per common share

20.

BUSINESS SEGMENTS INFORMATION

We operate our business in two distinct operating and reportable segments based on the markets we serve: “Domestic” and “International”. The Chief Operating Decision Maker (“CODM”) evaluates segment reporting based on net sales and Segment EBITDA and Segment Adjusted EBITDA. We calculate Segment EBITDA as net income or loss before interest, income taxes, depreciation and amortization. We calculate Segment Adjusted EBITDA as Segment EBITDA before non-cash stock-based compensation expense, non-cash charges and certain other expenses.

Domestic — Our Domestic segment manufactures and markets products throughout the United States. We maintain and serve these markets through strong product distribution relationships with many of the largest national and independent waterworks distributors, major national retailers as well as an extensive network of hundreds of small to medium-sized distributors across the U.S. We also sell through a broad variety of buying groups and co-ops in the United States. Products include Singlewall pipe, N-12 HDPE pipe sold into the Storm sewer and Infrastructure markets, N-12 High Performance PP pipe sold into the Storm sewer and sanitary sewer markets, and our broad line of Allied Products including Stormtech, Nyloplast, Arc Septic Chambers, Inserta Tee, Baysaver filters and water quality structures, Fittings, and FleXstorm. Our Domestic segment sales are diversified across all regions of the country.

International — Our international segment manufactures and markets products in regions outside of the United States, with a growth strategy focused on our owned facilities in Canada and through our joint-ventures, with best-in-class local partners in Mexico, Central America and South America. Our joint venture strategy provides us with local and regional access to new markets such as Brazil, Chile, Argentina, Peru and Colombia. We have been serving the Canadian market through Hancor of Canada since 2003. Our Mexican joint venture through ADS Mexicana primarily serves the Mexican markets, while our Brazilian joint venture through Tigre ADS is our primary channel to serve the South American markets. Our product line includes Singlewall pipe, N-12 HDPE pipe, and N-12 High Performance PP pipe. The Canadian market also sells our broad line of Allied Products, while sales in Latin America are currently concentrated in fittings and Nyloplast.

F-39

The following table sets forth reportable segment information with respect to the amount of net sales contributed by each class of similar products of our consolidated gross profit in each of the fiscal years ending March 31:


(Amounts in thousands)	2012		2013		2014
Domestic
Pipe	$	678,934	$	654,068	$	700,663
Allied Products		209,736		223,676		234,729

Total Domestic		888,670		877,744		935,392

International
Pipe		104,107		114,349		108,162
Allied Products		20,979		24,948		25,455

Total International		125,086		139,297		133,617

Total net sales	$	1,013,756	$	1,017,041	$	1,069,009

The following sets forth certain additional financial information attributable to our reportable segments for the fiscal years ended March 31:


(Amounts in thousands)	2012		2013		2014
Net sales
Domestic	$	888,670	$	877,744	$	935,392
International		125,086		139,297		133,617

Total	$	1,013,756	$	1,017,041	$	1,069,009

Gross profit
Domestic	$	170,518	$	177,717	$	182,841
International		24,840		31,594		30,050

Total	$	195,358	$	209,311	$	212,891

Segment Adjusted EBITDA
Domestic	$	102,241	$	109,726	$	131,155
International		14,632		20,033		15,854

Total	$	116,873	$	129,759	$	147,009

Interest expense
Domestic	$	21,597	$	16,045	$	16,093
International		240		50		48

Total	$	21,837	$	16,095	$	16,141

Depreciation and amortization
Domestic	$	49,631	$	50,691	$	50,660
International		5,540		4,914		5,238

Total	$	55,171	$	55,605	$	55,898

Equity in net income (loss) of unconsolidated affiliates
Domestic	$	—	$	—	$	417
International		704		387		(2,009	)

Total	$	704	$	387	$	(1,592	)

Capital expenditures
Domestic	$	22,281	$	37,800	$	36,450
International		4,186		2,204		3,838

Total	$	26,467	$	40,004	$	40,288

F-40

The following sets forth certain additional financial information attributable to our reporting segments as of March 31:


	2012			2013			2014
Investment in unconsolidated affiliates
Domestic	$	—		$	—		$	5,202
International		20,758			22,012			20,029

Total	$	20,758		$	22,012		$	25,231

Total identifiable assets
Domestic	$	797,297		$	795,646		$	835,736
International		110,142			114,060			115,167
Eliminations		(2,411	)		(1,967	)		(13,308	)

Total	$	905,028		$	907,739		$	937,595

Reconciliation of Segment EBITDA and Segment Adjusted EBITDA to Consolidated Net Income


	Fiscal Year Ended March 31,
(Amounts in thousands)	2012					2013					2014
(Amounts in thousands)	Domestic			International		Domestic			International		Domestic			International
Net income attributable to ADS	$	37,894		$	5,366	$	18,332		$	9,827	$	6,084		$	5,040
Depreciation and amortization ^(a)		52,832			6,524		50,691			6,235		50,808			6,646
Interest expense		21,597			240		16,045			50		16,093			48
Income tax expense		25,855			1,209		14,787			2,107		20,594			1,981

Segment EBITDA		138,178			13,339		99,855			18,219		93,579			13,715
Derivative fair value adjustments		2,315			—		(4	)		—		(53	)		—
Foreign currency transaction losses		—			378		—			1,085		—			845
Gain on sale of Septic Chamber business		(44,634	)		—		—			—		—			—
Unconsolidated affiliates interest and tax		—			915		—			729		8			196
Management fee to minority interest holder JV		—			—		—			—		—			1,098
Special Dividend compensation expense		—			—		—			—		22,624			—
Contingent consideration remeasurement		—			—		—			—		259			—
Share based compensation		1,425			—		2,592			—		5,287			—
ESOP deferred compensation		4,957			—		7,283			—		7,891			—
Transaction costs ^(b)		—			—		—			—		1,560			—

Segment Adjusted EBITDA	$	102,241		$	14,632	$	109,726		$	20,033	$	131,155		$	15,854

(a)

Includes our proportionate share of depreciation and amortization expense of $985, $1,321 and $1,556 related to our Tigre ADS joint venture and BaySaver joint venture, which is included in Net income of unconsolidated affiliates in our Consolidated Statements of Income for the fiscal years ended March 31, 2012, 2013, and 2014, respectively. Depreciation and amortization for the fiscal year ended March 31, 2012 also includes a charge of $3,200 related to the impairment of our Hancor trademark.

(b)	Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with our recent debt refinancing and in connection with this offering.

F-41

Geographic Sales and Assets Information

Net sales are attributed to the geographic location based on the location of the customer. The table below represents the sales and long-lived asset information by geographic location for each of the fiscal years ended March 31:


(Amounts in thousands)	2012		2013		2014
Net sales
North America	$	996,136	$	998,617	$	1,051,220
Other		17,620		18,424		17,789

Total	$	1,013,756	$	1,017,041	$	1,069,009


(Amounts in thousands)			2013		2014
Long-Lived Assets
North America			$	495,767	$	486,885
Other				24,551		22,211

Total			$	520,318	$	509,096

21.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

The increase and (decrease) in cash due to the changes in working capital accounts for the fiscal years ended March 31, were as follows:


(Amounts in thousands)	2012			2013			2014
Changes in working capital:
Receivables	$	(29,657	)	$	22,501		$	(6,716	)
Inventories		13,721			(34,846	)		(33,104	)
Prepaid expenses and other current assets		(1,241	)		(639	)		(4,815	)
Other assets		(2,656	)		(2,576	)		(3,509	)
Accounts payable, accrued expenses, and other liabilities		13,013			(7,652	)		12,107

Total changes in working capital:	$	(6,820	)	$	(23,212	)	$	(36,037	)

Supplemental disclosures of cash flow information for the fiscal years ended March 31 were as follows:


(Amounts in thousands)	2012		2013		2014
Supplemental disclosures of cash flow information — cash paid during years:
Interest	$	20,994	$	15,872	$	14,546
Income taxes		16,932		23,893		23,701

(Amounts in thousands)	2012		2013		2014
Supplemental schedule of noncash investing and financing activities:
Redeemable Convertible Preferred Stock dividend (Note 16)	$	104	$	110	$	118
Redemption of common stock to exercise stock options		1,278		805		1,187
Receivable recorded to exercise stock options		36		142		76
Purchases of plant, property, and equipment included in accounts payable		127		3,884		634
Receivable recorded for sale of assets/businesses (Note 2)		—		—		1,241
Inventory contributed for Investment in unconsolidated affiliate (Note 9)		—		—		1,285

F-42

22.

SUBSEQUENT EVENTS

We evaluated subsequent events through May 19, 2014, the date these consolidated financial statements were available to be issued.

In April 2014, ADS Ventures, Inc., a wholly-owned subsidiary of the Company, and Tigre S.A. – Tubos e Conexões entered into a stock purchase agreement whereby ADS Ventures, Inc. acquired 49% of the outstanding shares of capital stock of Tigre USA, Inc. for $3,566 and entered into a joint venture agreement with Tigre S.A. — Tubos e Conexões to form Tigre-ADS USA Inc. The new joint venture will manufacture and sell PVC fittings for waterworks, plumbing and HVAC applications and primarily serve the United States and Canadian markets. The new joint venture represents a continuation of the existing activities of Tigre USA through its Janesville, Wisconsin manufacturing facility.

* * * * * *

F-43

SCHEDULE II

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

Consolidated Valuation and Qualifying Accounts

For the Fiscal Years Ended March 31, 2012, 2013 and 2014 (in thousands):


Accumulated Provision for Uncollectible Accounts:	Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts(a)		Deductions		Balance at End of Period
Year ended March 31, 2012		3,920		1,154		28		(933)		4,169
Year ended March 31, 2013		4,169		1,421		(2)		(899)		4,689
Year ended March 31, 2014		4,689		872		(67)		(1,517)		3,977

(a)	Amounts represent the impact of foreign currency translation.

F-44

Shares

LOGO

Advanced Drainage Systems, Inc.

Common Stock

Prospectus

, 2014

Barclays

Deutsche Bank Securities

Citigroup

RBC Capital Markets

BofA Merrill Lynch

Fifth Third Securities

PNC Capital Markets LLC

Through and including , 2014 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses payable by us in connection with the sale and distribution of the securities registered hereby, other than underwriting discounts or commissions. All amounts are estimates except for the SEC registration fee and the Financial Industry Regulatory Authority filing fee.


SEC Registration Fee	$	12,880
FINRA Filing Fee	$	15,500
Stock Exchange Listing Fee	$	*
Printing Fees and Expenses	$	*
Accounting Fees and Expenses	$	*
Legal Fees and Expenses	$	*
Transfer Agent Fees and Expenses	$	*
Miscellaneous	$	*

Total	$	*

*	To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Delaware General Corporation Law

Advanced Drainage Systems, Inc. is incorporated under the laws of the State of Delaware.

Section 145(a) of the General Corporation Law of the State of Delaware, or the “DGCL,” provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful.

Section 145(b) of the DGCL provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.

II-1

Section 145(c) of the DGCL provides that to the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145 of the DGCL, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

Section 145(e) of the DGCL provides that expenses, including attorneys’ fees, incurred by an officer or director of the corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in Section 145 of the DGCL. Such expenses, including attorneys’ fees, incurred by former directors and officers or other persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.

Section 145(g) of the DGCL specifically allows a Delaware corporation to purchase liability insurance on behalf of its directors and officers and to insure against potential liability of such directors and officers regardless of whether the corporation would have the power to indemnify such directors and officers under Section 145 of the DGCL.

Our Amended and Restated Certificate of Incorporation will contain provisions permitted under the DGCL relating to the liability of directors. These provisions will eliminate a director’s personal liability to the fullest extent permitted by the DGCL for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving:

•

any breach of the director’s duty of loyalty;

•

acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;

•

under Section 174 of the DGCL (unlawful dividends); or

•

any transaction from which the director derives an improper personal benefit.

Our Amended and Restated Certificate of Incorporation and our Second Amended and Restated Bylaws will require us to indemnify and advance expenses to our directors and officers to the fullest extent not prohibited by the DGCL and other applicable law, except in the case of a proceeding instituted by the director without the approval of our board of directors. Our Amended and Restated Certificate of Incorporation and our Second Amended and Restated Bylaws will provide that we are required to indemnify our directors and officers, to the fullest extent permitted by law, for all judgments, fines, settlements, legal fees and other expenses incurred in connection with pending or threatened legal proceedings because of the director’s or officer’s positions with us or another entity that the director or officer serves at our request, subject to various conditions, and to advance funds to our directors and officers to enable them to defend against such proceedings. To receive indemnification, the director or officer must have been successful in the legal proceeding or have acted in good faith and in what was reasonably believed to be a lawful manner in our best interest and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Section 102(b)(7) of the DGCL permits a Delaware corporation to include a provision in its certificate of incorporation eliminating or limiting the personal liability of directors to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. This provision, however, may not eliminate or limit a director’s liability (1) for breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (3) under Section 174 of the DGCL, or (4) for any transaction from which the director derived an improper personal benefit. Our Amended and Restated Certificate of Incorporation will contain such a provision.

II-2

Indemnification Agreements

We have entered into indemnification agreements with our directors and certain of our officers. The indemnification agreements will provide the directors and officers with contractual rights to the indemnification and expense advancement rights provided under our amended and restated bylaws, as well as contractual rights to additional indemnification as provided in the indemnification agreements.

Directors’ and Officers’ Liability Insurance

We have obtained directors’ and officers’ liability insurance which insures against certain liabilities that our directors and officers and our subsidiaries’ directors and officers may, in such capacities, incur.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since three years before the date of the initial filing of this Registration Statement, we have sold securities without registration under the Securities Act of 1933, as amended, as described below:

Issuance of Common Stock

In May 2011, we issued an aggregate of 1,272 shares of common stock to four directors who elected to receive the equivalent of their compensation in common stock at $50.35 per share.

In May 2012, we issued an aggregate of 1,080 shares of common stock to four directors who elected to receive the equivalent of their compensation in common stock at $59.25 per share.

In February 2013, we issued an aggregate of 2,609 shares of common stock to four directors who elected to receive the equivalent of their compensation in common stock at $64.20 per share.

Restricted Stock Grants

On May 3, 2011, we issued an aggregate of 19,400 shares of restricted common stock to 53 employees pursuant to the 2008 Plan in consideration of services provided or to be provided.

On November 3, 2011, we issued 500 shares of restricted common stock to one employee pursuant to the 2008 Plan in consideration of services provided or to be provided.

On May 1, 2012, we issued an aggregate of 32,400 shares of restricted common stock to 66 employees pursuant to the 2008 Plan in consideration of services provided or to be provided.

On May 1, 2013, we issued an aggregate of 33,400 shares of restricted common stock to 63 employees pursuant to the 2008 Plan in consideration of services provided or to be provided.

On August 6, 2013, we issued an aggregate of 320 shares of restricted common stock to one employee pursuant to the 2008 Plan in consideration of services provided or to be provided.

Options Grants and Common Stock Issued upon Exercise of Options

Since April 1, 2011, we have issued to directors, officers and employees options to purchase an aggregate of 453,704.383 shares of common stock with exercise prices ranging from $50.35 to $64.20 per share pursuant to the 2000 Plan and 2013 Plan.

Since April 1, 2011, upon the exercise of stock options, we have issued 264,586 shares of common stock to certain officers, directors and employees in exchange for an aggregate of $5,976,007.

II-3

These transactions did not involve any underwriters or any public offerings. These transactions were exempt from registration under the Securities Act, pursuant to Section 4(a)(2) of the Securities Act or Regulation D or Rule 701 promulgated thereunder, as transactions by an issuer not involving a public offering. No general solicitation was made either by us or any person acting on our behalf; the recipients of our common stock agreed that the securities would be subject to the standard restrictions applicable to a private placement of securities under applicable state and federal securities laws; and appropriate legends were affixed to the certificates issued.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Exhibits.

The following exhibits are included as exhibits to this Registration Statement.

Exhibit List


Exhibit Number		Exhibit Description

1.1		Form of Underwriting Agreement.*

3.1		Form of Certificate of Amendment of Certificate of Incorporation of Advanced Drainage Systems, Inc.†

3.2		Form of Amended and Restated Certificate of Incorporation of Advanced Drainage Systems, Inc.†

3.3		Form of Second Amended and Restated Bylaws of Advanced Drainage Systems, Inc.†

4.1		Form of Preferred Stock Certificate.*

4.2		Form of Common Stock Certificate.*

4.3		Form of Termination of Amended and Restated Stockholders’ Agreement.†

4.4		Form of Registration Rights Agreement, by and among Advanced Drainage Systems, Inc. and the stockholders from time to time party thereto.†

4.5		Form of 5.60% Senior Series A Secured Notes due September 24, 2018.#

4.6		Form of 4.05% Senior Series B Secured Notes due September 24, 2019.#

5.1		Opinion of Squire Patton Boggs (US) LLP.*

10.1		Amended and Restated Credit Agreement, dated as of June 12, 2013, by and among Advanced Drainage Systems, Inc., as borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto, PNC Bank, National Association, as administrative agent for the lenders party thereto, and the other parties thereto.#

10.1A		First Amendment to Amended and Restated Credit Agreement, dated as of December 20, 2013.#

10.2		Second Amended and Restated Credit Agreement, dated as of June 12, 2013, by and among ADS Mexicana, S.A. de C.V., as borrower, the lenders party thereto, PNC Bank, National Association, as administrative agent for the lenders party thereto, and the other parties thereto.#

10.2A		First Amendment to Second Amended and Restated Credit Agreement, dated as of December 20, 2013.#

10.3		Amended and Restated Private Shelf Agreement, dated as of September 24, 2010, by and among Advanced Drainage Systems, Inc., as seller, the guarantors from time to time party thereto, Prudential Investment Management, Inc., as a purchaser, and the other purchasers from time to time party thereto.#

10.3A		Amendment No. 1 to Amended and Restated Private Shelf Agreement, dated as of December 12, 2011.#

10.3B		Amendment No. 2 to Amended and Restated Private Shelf Agreement, dated as of March 9, 2012.#

10.3C		Amendment No. 3 to Amended and Restated Private Shelf Agreement, dated as of March 30, 2012.#

II-4


Exhibit Number		Exhibit Description

10.3D		Amendment No. 4 to Amended and Restated Private Shelf Agreement, dated as of April 26, 2013.#

10.3E		Amendment No. 5 to Amended and Restated Private Shelf Agreement, dated as of June 16, 2013.#

10.3F		Supplement to Amendment No. 5 to Amended and Restated Private Shelf Agreement, dated as of June 24, 2013.#

10.3G		Amendment No. 6 to Amended and Restated Private Shelf Agreement, dated as of September 23, 2013.#

10.3H		Amendment No. 7 to Amended and Restated Private Shelf Agreement, dated as of December 31, 2013.#

10.4		Amended and Restated Security Agreement, dated as of June 12, 2013, by and among Advanced Drainage Systems, Inc., as borrower, the guarantors from time to time party thereto, and PNC Bank, National Association, as collateral agent for certain secured parties.#

10.5		Amended and Restated Pledge Agreement, dated as of June 12, 2013, by Advanced Drainage Systems, Inc. and certain other parties thereto, as pledgors, in favor of PNC Bank, National Association, as collateral agent for certain secured parties.#

10.6		Amended and Restated Intercompany Subordination Agreement, dated as of June 12, 2013, by and among Advanced Drainage Systems, Inc., the guarantors from time to time party thereto, and PNC Bank, National Association, as administrative agent for certain lenders.#

10.7		Amended and Restated Intercreditor and Collateral Agency Agreement, dated as of June 12, 2013, by and among PNC Bank, National Association, as collateral agent for certain secured parties, PNC Bank, National Association, as administrative agent for certain lenders, and certain noteholders.#

10.8		Advanced Drainage Systems, Inc. Non-Employee Director Compensation Plan.†

10.9		Advanced Drainage Systems, Inc. Amended 2000 Incentive Stock Option Plan.#

10.10		Advanced Drainage Systems, Inc. 2008 Restricted Stock Plan.#

10.11		Advanced Drainage Systems, Inc. 2013 Stock Option Plan.#

10.12		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Joseph A. Chlapaty.#

10.13		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Mark B. Sturgeon.#

10.14		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Thomas M. Fussner.#

10.15		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Ronald R. Vitarelli.#

10.16		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Robert M. Klein.#

10.17		Form of Indemnification Agreement.#

10.18		Form of Incentive Stock Option Agreement pursuant to 2000 Incentive Stock Option Plan.#

10.19		Form of Non-Qualified Stock Option Agreement (other than for Joseph A. Chlapaty) pursuant to 2013 Stock Option Plan.#

10.19A		Form of Non-Qualified Stock Option Agreement (for Joseph A. Chlapaty) pursuant to 2013 Stock Option Plan.#

II-5


Exhibit Number		Exhibit Description

10.20		Form of Restricted Stock Agreement (other than for Joseph A. Chlapaty) pursuant to 2008 Restricted Stock Plan.#

10.20A		Form of Restricted Stock Agreement (for Joseph A. Chlapaty) pursuant to 2008 Restricted Stock Plan.#

10.21		Form of Director Stock Agreement.†

10.22		Participation Agreement, dated as of July 17, 2000, by and between ADS Worldwide, Inc., Grupo Altima S.A. de C.V., and ADS Mexicana, S.A. de C.V. (formerly known as Sistemas Ecologicos de Drenaje, S.A. de C.V.), as amended on April 19, 2010, May 19, 2011, May 24, 2011, April 26, 2013 and January 31, 2014.#

10.23		Interestholders Agreement, dated as of June 5, 2009, by and among Tubos y Plasticos ADS Chile Limitada, Tigre Chile S.A., and Tuberias T-A Limitada, joined by Advanced Drainage Systems, Inc. and Tigre S.A. — Tubos e Conexoes, as amended on July 31, 2009, October 2009, December 15, 2009, May 18, 2010, August 10, 2010, April 1, 2011 and January 25, 2012, with First Addendum to Interestholders Agreement, dated as of June 27, 2011.#

10.24		Limited Liability Company Agreement, dated July 15, 2013, by and among ADS Ventures, Inc., BaySaver Technologies, Inc. and Mid-Atlantic Storm Water Research Center, Inc.#

10.25		USA Shareholders Agreement, dated as of April 7, 2014, by and among Tigre-ADS USA Inc., ADS Ventures, Inc. and Tigre S.A. — Tubos e Conexoes.†

21.1		List of Subsidiaries.#

23.1		Consent of Deloitte & Touche LLP.†

23.2		Consent of Squire Patton Boggs (US) LLP (included in Exhibit 5.1 hereto).*

23.3		Consent of Freedonia Custom Research, Inc.#

24.1		Power of Attorney.#

*	To be filed by amendment.

†	Filed herewith.

#	Previously filed.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-6

(1)

For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)

For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(d) For the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(e) For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(1)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(2)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(3)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(4)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, Advanced Drainage Systems, Inc. has duly caused this Amendment No. 4 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hilliard, State of Ohio, on July 2, 2014.


ADVANCED DRAINAGE SYSTEMS, INC.

By:	/s/ Joseph A. Chlapaty
Name: Title:		Joseph A. Chlapaty President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 4 to the registration statement has been signed on July 2, 2014 by the following persons in the capacities indicated.


Signature		Title
/s/ Joseph A. Chlapaty		Chairman of the Board of Directors, Director, President and Chief Executive Officer (Principal Executive Officer)

Joseph A. Chlapaty

/s/ Mark B. Sturgeon		Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer)

Mark B. Sturgeon

*		Director

Robert M. Eversole

*		Director

Alexander R. Fischer

*		Director

Tanya Fratto

*		Director

M.A. (Mark) Haney

*		Director

David L. Horing

*		Director

C. Robert Kidder

*		Director

Mark A. Lovett

*		Director

Richard A. Rosenthal

*		Director

Abigail S. Wexner

*		Director

Scott M. Wolff

*By:

/s/ Joseph A. Chlapaty

Joseph A. Chlapaty

Attorney-in-Fact

II-8

EXHIBIT INDEX

Exhibit List


Exhibit Number		Exhibit Description

1.1		Form of Underwriting Agreement.*

3.1		Form of Certificate of Amendment of Certificate of Incorporation of Advanced Drainage Systems, Inc.†

3.2		Form of Amended and Restated Certificate of Incorporation of Advanced Drainage Systems, Inc.†

3.3		Form of Second Amended and Restated Bylaws of Advanced Drainage Systems, Inc.†

4.1		Form of Preferred Stock Certificate.*

4.2		Form of Common Stock Certificate.*

4.3		Form of Termination of Amended and Restated Stockholders’ Agreement.†

4.4		Form of Registration Rights Agreement, by and among Advanced Drainage Systems, Inc. and the stockholders from time to time party thereto.†

4.5		Form of 5.60% Senior Series A Secured Notes due September 24, 2018.#

4.6		Form of 4.05% Senior Series B Secured Notes due September 24, 2019.#

5.1		Opinion of Squire Patton Boggs (US) LLP.*

10.1		Amended and Restated Credit Agreement, dated as of June 12, 2013, by and among Advanced Drainage Systems, Inc., as borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto, PNC Bank, National Association, as administrative agent for the lenders party thereto, and the other parties thereto.#

10.1A		First Amendment to Amended and Restated Credit Agreement, dated as of December 20, 2013.#

10.2		Second Amended and Restated Credit Agreement, dated as of June 12, 2013, by and among ADS Mexicana, S.A. de C.V., as borrower, the lenders party thereto, PNC Bank, National Association, as administrative agent for the lenders party thereto, and the other parties thereto.#

10.2A		First Amendment to Second Amended and Restated Credit Agreement, dated as of December 20, 2013.#

10.3		Amended and Restated Private Shelf Agreement, dated as of September 24, 2010, by and among Advanced Drainage Systems, Inc., as seller, the guarantors from time to time party thereto, Prudential Investment Management, Inc., as a purchaser, and the other purchasers from time to time party thereto.#

10.3A		Amendment No. 1 to Amended and Restated Private Shelf Agreement, dated as of December 12, 2011.#

10.3B		Amendment No. 2 to Amended and Restated Private Shelf Agreement, dated as of March 9, 2012.#

10.3C		Amendment No. 3 to Amended and Restated Private Shelf Agreement, dated as of March 30, 2012.#

10.3D		Amendment No. 4 to Amended and Restated Private Shelf Agreement, dated as of April 26, 2013.#

10.3E		Amendment No. 5 to Amended and Restated Private Shelf Agreement, dated as of June 16, 2013.#

10.3F		Supplement to Amendment No. 5 to Amended and Restated Private Shelf Agreement, dated as of June 24, 2013.#

10.3G		Amendment No. 6 to Amended and Restated Private Shelf Agreement, dated as of September 23, 2013.#

10.3H		Amendment No. 7 to Amended and Restated Private Shelf Agreement, dated as of December 31, 2013.#

II-9


Exhibit Number		Exhibit Description

10.4		Amended and Restated Security Agreement, dated as of June 12, 2013, by and among Advanced Drainage Systems, Inc., as borrower, the guarantors from time to time party thereto, and PNC Bank, National Association, as collateral agent for certain secured parties.#

10.5		Amended and Restated Pledge Agreement, dated as of June 12, 2013, by Advanced Drainage Systems, Inc. and certain other parties thereto, as pledgors, in favor of PNC Bank, National Association, as collateral agent for certain secured parties.#

10.6		Amended and Restated Intercompany Subordination Agreement, dated as of June 12, 2013, by and among Advanced Drainage Systems, Inc., the guarantors from time to time party thereto, and PNC Bank, National Association, as administrative agent for certain lenders.#

10.7		Amended and Restated Intercreditor and Collateral Agency Agreement, dated as of June 12, 2013, by and among PNC Bank, National Association, as collateral agent for certain secured parties, PNC Bank, National Association, as administrative agent for certain lenders, and certain noteholders.#

10.8		Advanced Drainage Systems, Inc. Non-Employee Director Compensation Plan.†

10.9		Advanced Drainage Systems, Inc. Amended 2000 Incentive Stock Option Plan.#

10.10		Advanced Drainage Systems, Inc. 2008 Restricted Stock Plan.#

10.11		Advanced Drainage Systems, Inc. 2013 Stock Option Plan.#

10.12		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Joseph A. Chlapaty.#

10.13		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Mark B. Sturgeon.#

10.14		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Thomas M. Fussner.#

10.15		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Ronald R. Vitarelli.#

10.16		Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Robert M. Klein.#

10.17		Form of Indemnification Agreement.#

10.18		Form of Incentive Stock Option Agreement pursuant to 2000 Incentive Stock Option Plan.#

10.19		Form of Non-Qualified Stock Option Agreement (other than for Joseph A. Chlapaty) pursuant to 2013 Stock Option Plan.#

10.19A		Form of Non-Qualified Stock Option Agreement (for Joseph A. Chlapaty) pursuant to 2013 Stock Option Plan.#

10.20		Form of Restricted Stock Agreement (other than for Joseph A. Chlapaty) pursuant to 2008 Restricted Stock Plan.#

10.20A		Form of Restricted Stock Agreement (for Joseph A. Chlapaty) pursuant to 2008 Restricted Stock Plan.#

10.21		Form of Director Stock Agreement.†

10.22		Participation Agreement, dated as of July 17, 2000, by and between ADS Worldwide, Inc., Grupo Altima S.A. de C.V., and ADS Mexicana, S.A. de C.V. (formerly known as Sistemas Ecologicos de Drenaje, S.A. de C.V.), as amended on April 19, 2010, May 19, 2011, May 24, 2011, April 26, 2013 and January 31, 2014.#

II-10


Exhibit Number		Exhibit Description

10.23		Interestholders Agreement, dated as of June 5, 2009, by and among Tubos y Plasticos ADS Chile Limitada, Tigre Chile S.A., and Tuberias T-A Limitada, joined by Advanced Drainage Systems, Inc. and Tigre S.A. — Tubos e Conexoes, as amended on July 31, 2009, October 2009, December 15, 2009, May 18, 2010, August 10, 2010, April 1, 2011 and January 25, 2012, with First Addendum to Interestholders Agreement, dated as of June 27, 2011.#

10.24		Limited Liability Company Agreement, dated July 15, 2013, by and among ADS Ventures, Inc., BaySaver Technologies, Inc. and Mid-Atlantic Storm Water Research Center, Inc.#

10.25		USA Shareholders Agreement, dated as of April 7, 2014, by and among Tigre-ADS USA Inc., ADS Ventures, Inc. and Tigre S.A. — Tubos e Conexoes.†

21.1		List of Subsidiaries.#

23.1		Consent of Deloitte & Touche LLP.†

23.2		Consent of Squire Patton Boggs (US) LLP (included in Exhibit 5.1 hereto).*

23.3		Consent of Freedonia Custom Research, Inc.#

24.1		Power of Attorney.#

*	To be filed by amendment.

†	Filed herewith.

#	Previously filed.

II-11

Exhibit 3.1

FORM OF

CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

ADVANCED DRAINAGE SYSTEMS, INC.

(2014 STOCK SPLIT)

ADVANCED DRAINAGE SYSTEMS, INC. (the “ Corporation ”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (as amended from time to time, the “ DGCL ”),

DOES HEREBY CERTIFY:

FIRST: The Certificate of Incorporation of the Corporation is hereby amended pursuant to Section 242 of the DGCL as follows:

A. The first sentence of Article FOURTH of the Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as set forth below:

“FOURTH: The total number of shares of capital stock which the corporation shall have authority to issue is shares, consisting of two classes of capital stock:

(i) shares of 2.50% Cumulative Convertible Voting Preferred Stock, par value $.01 per share (the “ Convertible Preferred Stock ”); and

(ii) shares of Common Stock, par value $.01 per share (the “ Common Stock ”).”

B. Article FOURTH of the Certificate of Incorporation of the Corporation is hereby amended by adding a new fourth paragraph immediately after the existing third paragraph and immediately prior to the existing fourth paragraph of Article FOURTH of the Certificate of Incorporation of the Corporation to read as set forth below:

“Upon the filing (the “ 2014 Stock Split Effective Time ”) pursuant to the General Corporation Law of the State of Delaware of the Certificate of Amendment of the Certificate of Incorporation of the Corporation (2014 Stock Split), (i) each share of the corporation’s Convertible Preferred Stock either issued and outstanding or held by the corporation as treasury stock immediately prior to the 2014 Stock Split Effective Time (“ 2014 Old Convertible Preferred Stock ”)

shall be and hereby is automatically reclassified and changed into fully-paid and nonassessable shares of Convertible Preferred Stock (“ 2014 New Convertible Preferred Stock ”), and (ii) each share of the corporation’s Common Stock either issued and outstanding or held by the corporation as treasury stock immediately prior to the 2014 Stock Split Effective Time (“ 2014 Old Common Stock ”) shall be and hereby is automatically reclassified and changed into fully-paid and nonassessable shares of Common Stock (“ 2014 New Common Stock ”), in each case without any further action by the corporation or the holder thereof and without increasing or decreasing the amount of stated capital or paid-in surplus of the corporation, and subject to the treatment of fractional share interests as described below (such stock splits, together, the “ 2014 Stock Split ”). No fractional shares of 2014 New Convertible Preferred Stock or 2014 New Common Stock shall be issued as a result of the 2014 Stock Split and, in lieu thereof, upon surrender after the 2014 Stock Split Effective Time of a certificate which formerly represented shares of 2014 Old Convertible Preferred Stock or 2014 Old Common Stock that were issued and outstanding immediately prior to the 2014 Stock Split Effective Time, any holder who would otherwise be entitled to a fractional share of 2014 New Convertible Preferred Stock or 2014 New Common Stock as a result of the 2014 Stock Split, following the 2014 Stock Split Effective Time, shall be entitled to receive a cash payment equal to the fraction of which such holder would otherwise be entitled multiplied by the fair market value per share as determined by the Board of Directors of the corporation. Each stock certificate that, immediately prior to the 2014 Stock Split Effective Time, represented shares of 2014 Old Convertible Preferred Stock or 2014 Old Common Stock that were issued and outstanding immediately prior to the 2014 Stock Split Effective Time shall, from and after the 2014 Stock Split Effective Time, automatically and without the necessity of presenting the same for exchange, represent the number of whole shares of 2014 New Convertible Preferred Stock or 2014 New Common Stock, as the case may be, after the 2014 Stock Split Effective Time into which the shares formerly represented by such certificate have been reclassified and changed into (as well as the right to receive cash in lieu of fractional shares of 2014 New Convertible Preferred Stock or 2014 New Common Stock, as the case may be, after the 2014 Stock Split Effective Time); provided, however, that each person of record holding a certificate that represented shares of 2014 Old Convertible Preferred Stock or 2014 Old Common Stock that were issued and outstanding immediately prior to the 2014 Stock Split Effective Time shall receive, upon surrender of such certificate, a new certificate evidencing and representing the number of whole shares of 2014 New Convertible Preferred Stock or 2014 New Common Stock, as the case may be, after the 2014 Stock Split Effective Time into which the shares formerly represented by such certificate have been reclassified and changed into; and provided further, however, that whether or not fractional shares would be issuable as a result of the 2014 Stock Split shall be determined on the basis of (i) the aggregate number of shares of

2014 Old Convertible Preferred Stock or 2014 Old Common Stock that were issued and outstanding immediately prior to the 2014 Stock Split Effective Time formerly represented by certificates that the holder is at the time surrendering for a new certificate evidencing and representing the number of whole shares of 2014 New Convertible Preferred Stock or 2014 New Common Stock, as the case may be, after the 2014 Stock Split Effective Time and (ii) the aggregate number of shares of 2014 New Convertible Preferred Stock or 2014 New Common Stock, as the case may be, after the 2014 Stock Split Effective Time into which the shares formerly represented by such certificates have been reclassified and changed into.”

SECOND: The amendment of the Certificate of Incorporation of the Corporation has been duly adopted in accordance with the provisions of Sections 242 of the DGCL, the Board of Directors of the Corporation having duly adopted resolutions setting forth such amendment, declaring its advisability and directing that it be submitted to the stockholders of the Corporation for their approval at the 2014 annual meeting of the stockholders of the Corporation; and on June 2, 2014 at such annual meeting, a majority of the outstanding stock entitled to vote thereon, and the holders of a majority of the outstanding stock of each class of stock entitled to vote thereon as a class, was voted in favor of such amendment.

[ Remainder of this page intentionally left blank ]

IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Certificate of Amendment on the day of , 2014.


ADVANCED DRAINAGE SYSTEMS, INC.

By:
Name:
Title:

Exhibit 3.2

FORM OF

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

ADVANCED DRAINAGE SYSTEMS, INC.

ADVANCED DRAINAGE SYSTEMS, INC., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1. The present name of the corporation is Advanced Drainage Systems, Inc. (the “ Corporation ”).

2. The Corporation was originally formed under the same name as Advanced Drainage Systems, Inc., a Delaware corporation, on October 31, 1966 by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware (the “ Secretary of State ”). A Certificate of Amendment amending the original Certificate of Incorporation was filed with the Secretary of State on each of the following dates: August 3, 1970; July 8, 1985; July 1, 1986; December 23, 1986; July 1, 1988; September 30, 1993; July 18, 2003; and March 24, 2006. A Certificate of Merger amending the original Certificate of Incorporation was filed with the Secretary of State on March 30, 1984. A Certificate of Amendment changing the Corporation’s authorized capital and effecting a -for-1 stock split was filed with the Secretary of State on , 2014.

3. The Corporation’s Certificate of Incorporation is hereby amended and restated pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware (as amended from time to time, the “ DGCL ”), so as to read in its entirety in the form attached hereto as Exhibit A and incorporated herein by this reference (Exhibit A and this Certificate collectively constituting the Corporation’s Amended and Restated Certificate of Incorporation).

4. The amendment and restatement of the Certificate of Incorporation of the Corporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL, the Board of Directors of the Corporation having duly adopted resolutions setting forth such amendment and restatement, declaring its advisability and directing that it be submitted to the stockholders of the Corporation for their approval at the 2014 annual meeting of the stockholders of the Corporation; and on June 2, 2014 at such annual meeting, a majority of the outstanding stock entitled to vote thereon, and the holders of a majority of the outstanding stock of each class of stock entitled to vote thereon as a class, was voted in favor of such amendment and restatement.

IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Amended and Restated Certificate of Incorporation on the day of , 2014.


ADVANCED DRAINAGE SYSTEMS, INC.

By:
Name:
Title:

EXHIBIT A

FORM OF

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

ADVANCED DRAINAGE SYSTEMS, INC.

FIRST : Name . The name of the corporation is Advanced Drainage Systems, Inc. (the “Corporation”).

SECOND : Registered Office . The Corporation’s registered office in the State of Delaware is at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, New Castle County. The name of its registered agent at such address is The Corporation Trust Company.

THIRD : Purpose . The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (as amended from time to time, the “ DGCL ”).

FOURTH : Capital Stock . The total number of shares of stock which the Corporation shall have authority to issue is , consisting of: (x) 1,000,000,000 shares of common stock, par value $0.01 per share (the “ Common Stock ”), (y) 100,000,000 shares of preferred stock, par value $0.01 per share (the “ General Preferred Stock ”), issuable in one or more series as hereinafter provided, and (z) shares of 2.50% Cumulative Convertible Voting Preferred Stock, par value $0.01 per share (the “ ESOP Preferred Stock ” and together with General Preferred Stock, “ Preferred Stock ”).

(a) Common Stock. Except as otherwise provided (i) by the DGCL, (ii) by Section (b) of this Article FOURTH, (iii) Section (c) of this Article FOURTH (and Exhibit 1 referenced therein), or (iv) by resolutions, if any, of the board of directors of the Corporation (the “ Board of Directors ”) fixing the powers, designations, preferences and the relative, participating, optional or other rights of General Preferred Stock, or the qualifications, limitations or restrictions of General Preferred Stock, the entire voting power of the shares of the Corporation for the election of directors and for all other purposes shall be vested exclusively in the Common Stock. Each share of Common Stock shall have one vote upon all matters to be voted on by the holders of the Common Stock, and shall be entitled to participate equally in all dividends payable with respect to the Common Stock and to share equally, subject to any rights and preferences of the General Preferred Stock (as fixed by resolutions, if any, of the Board of Directors) or the ESOP Preferred Stock, in all assets of the Corporation, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, or upon any distribution of the assets of the Corporation. Notwithstanding the foregoing,

while any shares of ESOP Preferred Stock are outstanding, pursuant to Section (c) of this Article FOURTH (and Exhibit 1 referenced therein), (A) except as otherwise required by the laws of the State of Delaware, the holders of outstanding shares of Common Stock shall vote together with the holders of outstanding shares of ESOP Preferred Stock as a single class, (B) any dividends or other distributions with respect to any outstanding shares of Common Stock shall not be declared or paid except in a manner that complies with Section (c) of this Article FOURTH (and Exhibit 1 referenced therein) and (C) the holders of outstanding shares of ESOP Preferred Stock shall be entitled to participate in dividends declared by the Board of Directors of the Corporation with respect to the outstanding shares of Common Stock to the extent and in the manner provided for in Section (c) of this Article FOURTH (and Exhibit 1 referenced therein).

(b) General Preferred Stock. Subject to the provisions of this Amended and Restated Certificate of Incorporation, the Board of Directors is authorized to fix from time to time by resolution or resolutions the number of shares of any class or series of General Preferred Stock, and to determine the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions, of any such class or series. Further, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any such class or series, the Board of Directors is authorized to increase or decrease (but not below the number of shares of such class or series then outstanding) the number of shares of any such class or series subsequent to the issue of shares of that class or series. In all events, the rights of any and all classes or series of General Preferred Stock shall be subject to and qualified by the rights of the holders of ESOP Preferred Stock specified in Section (c) of this Article FOURTH (and Exhibit 1 referenced therein).

(c) ESOP Preferred Stock. The powers, designations, preferences and relative, participating, optional or other special rights of, and the qualifications, limitations and restrictions applicable to, the ESOP Preferred Stock shall be as set forth on Exhibit 1 attached to this Amended and Restated Certificate of Incorporation.

FIFTH : Management of Corporation . The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and for the purpose of creating, defining, limiting and regulating the powers of the Corporation and its directors and stockholders:

(a) The number of directors constituting the Board of Directors shall be not fewer than three and not more than seventeen, each of whom shall be a natural person. Subject to any special rights of any holders of any class or series of Preferred Stock to elect directors, the precise number of directors of the Corporation shall be fixed, and may be altered from time to time, only by resolution of the Board of Directors.

(b) The directors of the Corporation, subject to any rights of the holders of shares of any class or series of Preferred Stock to elect directors, shall be classified with respect to the time for which they severally hold office into three classes, as nearly equal in number as possible. One class’s initial term will expire at the first annual meeting of

stockholders of the Corporation following the effectiveness of this Amended and Restated Certificate of Incorporation, another class’s initial term will expire at the second annual meeting of stockholders following the effectiveness of this Amended and Restated Certificate of Incorporation and another class’s initial term will expire at the third annual meeting of stockholders following the effectiveness of this Amended and Restated Certificate of Incorporation, with directors of each class to hold office until their successors are duly elected and qualified, provided that the term of each director shall continue until the election and qualification of his or her successor or until such director’s earlier death, resignation or removal. At each annual meeting of stockholders of the Corporation beginning with the first annual meeting of stockholders following the effectiveness of this Amended and Restated Certificate of Incorporation, subject to any rights of the holders of shares of any class or series of Preferred Stock, the successors of the directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. In the case of any increase or decrease, from time to time, in the number of directors of the Corporation, the number of directors in each class shall be apportioned as nearly equal as possible. No decrease in the number of directors shall shorten the term of any incumbent director.

(c) Subject to this Article FIFTH, the election of directors may be conducted in any manner approved by the person presiding at a meeting of the stockholders or the directors, as the case may be, at the time when the election is held and need not be by written ballot. The stockholders do not have the right to cumulate their votes for the election of directors.

(d) Subject to any rights of the holders of shares of any class or series of Preferred Stock, if any, to elect additional directors under specified circumstances, a director may be removed from office only for cause and only by the affirmative vote of holders of at least three-fourths (75%) of the votes to which all the stockholders of the Corporation would be entitled to cast in any election of directors or class of directors.

(e) Subject to any rights of the holders of shares of any class or series of Preferred Stock, if any, to elect additional directors under specified circumstances and, except as otherwise provided by law, any vacancy in the Board of Directors that results from an increase in the number of directors, from the death, disability, resignation, disqualification or removal of any director or from any other cause shall be filled solely by a majority of the total number of directors then in office, even if less than a quorum, or by a sole remaining director.

(f) All corporate powers and authority of the Corporation (except as at the time otherwise provided by law, by this Amended and Restated Certificate of Incorporation or by the bylaws of the Corporation) shall be vested in and exercised by the Board of Directors.

(g) To the fullest extent permitted by the DGCL, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended after the date of the filing of this

Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended from time to time.

(h) To the fullest extent permitted by the DGCL, the Corporation shall indemnify and advance expenses to the directors of the Corporation, provided that, except as otherwise provided in the bylaws of the Corporation, the Corporation shall not be obligated to indemnify or advance expenses to a director of the Corporation in respect of an action, suit or proceeding (or part thereof) instituted by such director, unless such action, suit or proceeding (or part thereof) has been authorized by the Board of Directors. The rights provided by this Article FIFTH, Section (h) shall not limit or exclude any rights, indemnities or limitations of liability to which any director of the Corporation may be entitled, whether as a matter of law, under the bylaws of the Corporation, by agreement, vote of the stockholders, approval of the directors of the Corporation or otherwise.

SIXTH . Stockholder Action by Written Consent . Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.

SEVENTH . Special Meetings . Subject to the special rights of any series of Preferred Stock and to the requirements of applicable law, special meetings of the stockholders of the Corporation for any purpose or purposes may be called only by or at the direction of the Board of Directors pursuant to a resolution of the Board of Directors adopted by a majority of the total number of directors then in office. The stockholders of the Corporation do not have the power to call a special meeting of the stockholders. Except as otherwise required by law, the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice. Any special meeting of the stockholders shall be held either within or without the State of Delaware, at such place, if any, and on such date and time as shall be specified in the notice of such special meeting. The bylaws of the Corporation may establish procedures regulating the submission by stockholders of nominations and proposals for consideration at meetings of stockholders of the Corporation.

EIGHTH : DGCL Section 203 . As permitted under and pursuant to Section 203(b)(3) of the DGCL, the Corporation shall not be governed by or subject to Section 203 of the DGCL.

NINTH : Approval of Specified Matters . Subject to the special rights of any series of Preferred Stock and to the requirements of applicable law, and in addition to any other vote required by this Amended and Restated Certificate of Incorporation, the bylaws of the Corporation or otherwise required by law, unless the following are approved by the affirmative vote of at least three-fourths (75%) of the total number of Directors then in office, the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares

of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to approve:

(a) a reorganization, recapitalization, share exchange, share reclassification, consolidation, conversion or merger of the Corporation;

(b) the sale, lease, exchange, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the Corporation’s assets; or

TENTH : Amendment of Certificate of Incorporation . The Corporation reserves the right to amend, alter or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed by the DGCL, and all rights herein conferred upon stockholders or directors are granted subject to this reservation, provided, however, that any amendment, alteration or repeal of Article FIFTH, Section (g) or Section (h) shall not adversely affect any right or protection existing under this Amended and Restated Certificate of Incorporation immediately prior to such amendment, alteration or repeal, including any right or protection of a director thereunder in respect of any act or omission occurring prior to the time of such amendment, alteration or repeal. Notwithstanding anything to the contrary contained in this Amended and Restated Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of any of Articles FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH, this Article TENTH or Articles ELEVENTH or TWELFTH may be amended, altered or repealed in any respect, nor may any provision or bylaw inconsistent therewith be adopted, unless, in addition to any other vote required by this Amended and Restated Certificate of Incorporation or otherwise required by law, such amendment, alteration or repeal is approved at a meeting of the stockholders called for that purpose by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

ELEVENTH : Amendment of Bylaws . In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to amend, alter or repeal the bylaws of the Corporation subject to the power of the stockholders of the Corporation entitled to vote with respect thereto to amend, alter or repeal the bylaws. Any amendment, alteration or repeal of the bylaws of the Corporation by the Board of Directors shall require the approval of three-fourths (75%) of the total number of Directors then in office. In addition to any other vote otherwise required by law, the stockholders of the Corporation may amend, alter or repeal the bylaws of the Corporation, provided that any such action will require the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote with respect thereto, voting together as a single class.

TWELFTH : Exclusive Jurisdiction for Certain Actions . Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding

brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL, this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation, or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article TWELFTH.

[ Remainder of page intentionally left blank; Exhibit 1 to Amended and Restated Certificate of

Incorporation of Advanced Drainage Systems, Inc. follows ]

EXHIBIT 1 TO

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

ADVANCED DRAINAGE SYSTEMS, INC.

The powers, designations, preferences and relative, participating, optional or other special rights of, and the qualifications, limitations and restrictions applicable to, the ESOP Preferred Stock shall be as follows:

1. Restricted Ownership.

Shares of ESOP Preferred Stock shall be issued only to a trustee acting on behalf of any employee stock ownership plan or other employee benefit plan of the Corporation (a “ Plan Trustee ”). In the event of any transfer of shares of ESOP Preferred Stock to any person other than to a Plan Trustee, including a distribution to the participants of an employee stock ownership plan or other employee benefit plan, the shares of ESOP Preferred Stock so transferred, upon such transfer and without any further action by the Corporation or the holder, shall be automatically converted into shares of Common Stock, on the terms provided for the conversion of shares of ESOP Preferred Stock into shares of Common Stock pursuant to Section 5 of this Exhibit 1 and no such transferee shall have any of the voting powers, preferences and relative, participating, optional or special rights ascribed to shares of ESOP Preferred Stock hereunder but, rather, only the powers and rights pertaining to the Common Stock into which such shares of ESOP Preferred Stock shall be so converted (the “ Automatic Conversion Upon Transfer ”). Certificates representing shares of ESOP Preferred Stock shall contain legends to reflect such restrictions on transfer. Notwithstanding the foregoing provisions of this Section 1 of this Exhibit 1 , shares of ESOP Preferred Stock may be converted into shares of Common Stock as provided by Section 5 of this Exhibit 1 and the shares of Common Stock issued upon such conversion may be transferred by the holder thereof as permitted by law and by the Corporation’s Amended and Restated Certificate of Incorporation, as amended.

2. Dividends.

(a) From and after the date of issuance (the “ Date of Issuance ”) of shares of ESOP Preferred Stock and prior to the date of conversion thereof, the holders of such shares shall be entitled to receive, out of the assets of the Corporation at the time legally available therefor and before any dividend or other distribution is declared or paid with respect to the outstanding shares of Common Stock or General Preferred Stock, cumulative dividends payable in cash or, at the option of the Corporation, in additional shares of ESOP Preferred Stock having a Fair Market Value equal to the cash value of the dividends, as and when declared by the Board of Directors, on March 31 of such year or on such other date in March of such year as shall be designated by the Board of Directors (each date is referred to herein as a “ Dividend Payment Date ” and the annual period between the consecutive Dividend Payment Dates is referred to herein as a “ Dividend Period ”) at the Applicable Dividend Rate (as defined below). To the extent: (i) a cash dividend is not paid on a Dividend Payment Date in accordance with the next preceding sentence; (ii) shares of ESOP Preferred Stock are available to the Company to make such dividend payment; and (iii) the Company is not legally prohibited from making a dividend

payment in shares of ESOP Preferred Stock at such time, then the Company shall make the dividend payment in shares of ESOP Preferred Stock. Such dividends shall be payable in arrears, in an annual installment at the Applicable Dividend Rate on each Dividend Payment Date. Each such annual dividend shall be paid to the holders of record of outstanding shares of ESOP Preferred Stock as their names shall appear on the share register of the Corporation on the corresponding Record Date (as defined below). As used herein, the term “ Applicable Dividend Rate ” means a dividend rate of $ per share per annum, which dividend rate is subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting shares of ESOP Preferred Stock. Also, as used in this Exhibit 1 , the term “ Record Date ” means, with respect to the annual dividends payable on March 31, the preceding March 15 or such other record date as may be designated by the Board of Directors in the event that the Board of Directors designates a Dividend Payment Date other than March 31.

(b) If, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, full cash dividends pursuant to subclause (a) above are not paid or made available to the holders of outstanding shares of ESOP Preferred Stock and the funds available to the Corporation for such purpose shall be insufficient to permit payment in full in cash to all such holders of outstanding shares of ESOP Preferred Stock of the preferential dividend amounts to which they are then entitled pursuant to subclause (a) above and such dividend is not paid in the form of additional shares of ESOP Preferred Stock, the entire amount available for payment of cash dividends with respect to the outstanding shares of ESOP Preferred Stock pursuant to subclause (a) above shall be distributed among the holders of outstanding shares of ESOP Preferred Stock ratably, in proportion to the full amounts to which they would otherwise be entitled, and any remainder not paid in cash to the holders of outstanding shares of ESOP Preferred Stock shall cumulate as provided in subclause (c) below.

(c) If, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, the holders of outstanding shares of ESOP Preferred Stock shall not have received the full dividends in cash or in shares of ESOP Preferred Stock to which they are entitled pursuant to subclause (a) above, then such unpaid dividends shall cumulate, whether or not declared, until so paid. If, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, full cumulative dividends on the ESOP Preferred Stock have not been declared and paid or set apart for payment when due, the Corporation shall not declare or pay or set apart for payment any dividends, or make any other distribution, repurchase, redemption, or retirements on any class of stock ranking junior to the ESOP Preferred Stock.

(d) In addition to the cumulative dividends payable with respect to the outstanding shares of ESOP Preferred Stock, pursuant to subclauses (a), (b) and (c) above if, on any Dividend Payment Date which is prior to the date of conversion of shares of ESOP Preferred Stock, after the payment of all dividends, if any, with respect to the outstanding shares of ESOP Preferred Stock pursuant to subclauses (a), (b) and (c) above any dividend shall be declared by the Board of Directors with respect to the outstanding shares of Common Stock, the holders of outstanding shares of ESOP Preferred Stock on the applicable Record Date shall be entitled to receive on the applicable Dividend Payment Date dividends in such amount as they would be entitled to receive if their shares of ESOP Preferred Stock had been converted into shares of Common Stock on the applicable Record Date.

3. Distributions Upon Liquidation. Dissolution or Winding Up.

(a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, and before any distribution or payment shall be made to the holders of outstanding shares of Common Stock or General Preferred Stock, the holders of outstanding shares of ESOP Preferred Stock shall be entitled to receive, out of the assets of the Corporation at the time legally available therefor, an amount equal to the Applicable Value (as defined below), together with all dividends accrued (whether or not declared) during the Dividend Period in which such liquidation, dissolution or winding up occurs and all cumulated and unpaid dividends, if any, accrued during any prior Dividend Periods. As used herein, the term “ Applicable Value ” means $ per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares. If, upon any such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the assets of the Corporation legally available therefor before any distribution or payment shall be made to the holders of outstanding shares of Common Stock or General Preferred Stock shall be insufficient to permit the payment in full to the holders of outstanding shares of ESOP Preferred Stock of the preferential liquidation amounts to which they are then entitled, the entire assets of the Corporation thus distributable shall be distributed among the holders of the outstanding shares of ESOP Preferred Stock ratably, in proportion to the full amounts to which such holders would otherwise be entitled if such assets were sufficient to permit payment in full. In addition, after the payment in full of all preferential liquidation amounts to which the holders of outstanding shares of ESOP Preferred Stock shall be entitled, the holders of outstanding shares of ESOP Preferred Stock shall be entitled to participate in the distribution of assets of the Corporation available for distribution to holders of Common Stock, ratably with the holders of outstanding shares of Common Stock, in proportion to the ratio which the total number of shares of Common Stock into which the outstanding shares of ESOP Preferred Stock would be convertible on the effective date of such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation bears to the total number of shares of Common Stock deemed to be outstanding on such date (assuming for this purpose the conversion of all outstanding shares of ESOP Preferred Stock on such effective date). Each holder of outstanding shares of ESOP Preferred Stock shall be entitled to receive that portion of the assets of the Corporation available for such distribution which number of shares of Common Stock issuable upon conversion of such holder’s shares of ESOP Preferred Stock bears to the total number of shares of Common Stock deemed to be outstanding on the effective date of such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

4. Redemption.

The shares of ESOP Preferred Stock shall not be redeemable at the option of the Corporation. Shares of ESOP Preferred Stock shall be redeemed by the Corporation, for cash at a redemption price equal to the greater of the Fair Market Value of the ESOP Preferred Stock or the Applicable Value, plus accumulated and unpaid dividends thereon to the date fixed for redemption, at the option of the holder, at any time and from time to time upon notice to the Corporation given not less than five (5) business days prior to the date fixed by the holder in such notice for such redemption, upon certification by such holder to the Corporation when and to the extent necessary for such holder to provide for distributions required to be made to

participants under the Corporation’s Employee Stock Ownership Plan, as amended and restated effective as of April 1, 2010, as the same may be amended (the “ ESOP ”), or any successor plan.

5. Conversion.

(a) From and after the Date of Issuance of shares of ESOP Preferred Stock and prior to the expiration of thirty days following the date (the “ ESOP Payment Date ”) the trustee of the Corporation’s ESOP receives written notice of the final payment by the ESOP of all amounts due to the Corporation pursuant to the Secured Term Loan Agreement dated on or about September 30, 1993 between the Corporation and the ESOP, each share of ESOP Preferred Stock shall be convertible, at the option of the holder thereof, into 0.7692 of a fully paid and nonassessable share of Common Stock of the Corporation, subject to adjustment as hereinafter set forth in subclause (e) below. Notwithstanding the foregoing provisions of this paragraph 5(a), in the case of an Automatic Conversion Upon Transfer resulting from the distribution to a participant of an employee stock ownership plan or other employee benefit plan, each share of ESOP Preferred Stock shall be converted into a number of Shares of Common Stock having Fair Market Value equal to the greater of (i) the Fair Market Value of the ESOP Preferred Stock, or (ii) the Applicable Value, plus accumulated and unpaid dividends thereon to the date of such Automatic Conversion Upon Transfer, but not less than the number of shares of Common Stock determined pursuant to the next preceding sentence.

(b) From and after the thirty-first day following the ESOP Payment Date, each share of ESOP Preferred Stock shall be convertible, at the option of the holder thereof, into .07692 of a fully paid and nonassessable share of Common Stock of the Corporation, subject to adjustment as hereinafter set forth in subclause (e) below.

(c) To exercise such conversion option, the holder of shares of ESOP Preferred Stock shall surrender the certificate or certificates representing the shares of ESOP Preferred Stock to be converted, duly endorsed for transfer to the Corporation, at the principal executive office of the Corporation, and shall give written notice, postage prepaid, by certified or registered mail, return receipt requested, or by hand delivery to the Corporation at its principal executive office, of the election of such holder to convert all or a portion of the shares of ESOP Preferred Stock represented by the certificate or certificates surrendered into shares of Common Stock which notice shall set forth the name or names in which the certificate or certificates representing the shares of Common Stock to be issued upon conversion are to be issued. Conversion shall be deemed to have been effected on the date of receipt by the Corporation of such notice and the certificate or certificates to be surrendered for conversion is made (the “ Conversion Date ”). As promptly as practicable thereafter, the Corporation shall issue to or upon the written order of such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled. The conversion of shares of ESOP Preferred Stock into shares of Common Stock shall be deemed to be effective and such holder, or the person or person designated by such holder, shall be deemed to have become a holder of record of the shares of Common Stock issuable upon conversion of such shares of ESOP Preferred Stock on the applicable Conversion Date unless the transfer books of the Corporation are closed on such date, in which event such holder shall be deemed to have become a holder of record of the shares of Common Stock issued upon conversion of the shares of ESOP Preferred Stock on the next succeeding date on which the transfer of books of the Corporation are open. Upon conversion of

only a portion of the number of shares of ESOP Preferred Stock represented by a certificate or certificates surrendered for conversion, the Corporation shall issue and deliver to or upon the written order of the holder of the certificate or certificates so surrendered a new certificate or certificates representing the number of shares of ESOP Preferred Stock not so converted.

(d) No fractional shares of Common Stock shall be issued upon conversion of shares of ESOP Preferred Stock. In lieu of issuing fractional shares of Common Stock upon conversion of shares of ESOP Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional shares of Common Stock equal to the fair-market value thereof as determined by the Board of Directors. The Corporation shall at all times reserve and keep available out of its authorized, but unissued shares of Common Stock, solely for the purpose of effecting the conversion of outstanding shares of ESOP Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of ESOP Preferred Stock from time-to-time outstanding.

(e) The number of shares of Common Stock into which a share of ESOP Preferred Stock shall be convertible as set forth in subclauses (a) and (b) above, shall be subject to adjustment from time-to-time as follows:

(1) In case the Corporation shall at any time subdivide its outstanding shares of Common Stock or shall issue a dividend or other distribution payable in shares of Common Stock, the number of shares of Common Stock into which a share of ESOP Preferred Stock shall be convertible shall be proportionately increased, effective immediately after the effective date of such subdivision or at the close of business on the record date fixed by the Board of Directors for such dividend or other distribution, as the case may be;

(2) In case the Corporation shall at any time combine its outstanding shares of Common Stock, the number of shares of Common Stock into which a share of ESOP Preferred Stock shall be convertible shall be proportionately decreased, effective immediately after the effective date of such combination; and

(3) In case the Corporation shall at any time recapitalize or reclassify its capital stock, or in case of any consolidation or merger of the Corporation with or into any other person in which the Corporation’s stock is exchanged solely for stock (other than a consolidation or merger in which the Corporation is the continuing entity and which does not result in any change in the capital stock of the Corporation) or in the case of the sale or other disposition of all or substantially all the assets of the Corporation as an entity to any other person solely for stock, then in each such case each outstanding share of ESOP Preferred Stock shall after such recapitalization, reclassification, consolidation, merger, sale or other disposition be convertible into preferred stock of the successor or resulting Corporation and shall have the same powers, preferences, rights and other attributes as the ESOP Preferred Stock, except that the common stock of the successor or resulting Corporation shall be the stock into which the preferred stock is convertible. The provisions set forth above shall apply to successive recapitalizations, reclassifications, consolidations, mergers, sales or other dispositions.

(4) In case of any consolidation or merger of the Corporation with or into any other person in which the Corporation’s stock is exchanged for stock and cash (other than a

consolidation or merger in which the Corporation is the continuing entity and which does not result in any change in the capital stock of the Corporation), the ESOP Preferred Stock shall be deemed converted into the Corporation’s Common Stock immediately prior to consummation of such transaction unless notified by the record holder of the ESOP Preferred Stock that such record holder elects to redeem the ESOP Preferred Stock at the price of par plus accumulated and unpaid dividends.

(f) All shares of Common Stock issued upon conversion of shares of ESOP Preferred Stock shall, upon issuance by the Corporation, be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.

6. Voting Rights. The holders of shares of ESOP Preferred Stock shall be entitled to vote on or otherwise consent to any matter requiring the vote or consent of the stockholders of the Corporation under the laws of the State of Delaware. Each holder of outstanding shares of ESOP Preferred Stock shall be entitled to one vote for each share of ESOP Preferred Stock immediately held of record by such holder on the record date fixed by the Board of Directors for determining the stockholders of the Corporation entitled to vote or otherwise consent to such matters. Except as otherwise required by the laws of the State of Delaware, the holders of outstanding shares of ESOP Preferred Stock shall vote together with the holders of outstanding shares of Common Stock as a single class.

7. Definitions. For the purpose of this Exhibit 1 , the following definitions shall apply:

“ Fair Market Value ” of any security which is not publicly traded or of any other property shall mean the fair value thereof as determined by an independent investment banking or appraisal firm experienced in the valuation of such securities or property selected in good faith by the Board of Directors or a committee thereof, or, if no such investment banking or appraisal firm is in the good faith judgment of the Board of Directors or such committee available to make such determination, as determined in good faith by the Board of Directors or such committee; provided, however, and solely for the purposes of this Exhibit 1 , the Fair Market Value of the ESOP Preferred Stock, the General Preferred Stock and the Common Stock (except, with respect to any such class of stock, at such time as it is publicly traded) shall be determined by reference to the most recent appraisal thereof rendered to the Plan Trustee of the Plan by its financial advisor or, at the election of the Corporation, a financial advisor mutually acceptable to the Plan Trustee and the Board of Directors or a committee thereof (except that in lieu of said most recent appraisal, in the event that the Fair Market Value could reasonably be expected to have changed since such appraisal, either the Plan Trustee or the Corporation may require said financial advisor to prepare a current appraisal thereof, in which event such current appraisal shall be determinative). As to shares of Common Stock, General Preferred Stock or any other class of capital stock or securities of the Corporation or any other issuer which are publicly traded, the “ Fair Market Value ” thereof shall mean the average of the Current Market Prices (as hereinafter defined) of such shares or securities for each day of the Adjustment Period (as hereinafter defined). “ Current Market Price ” of publicly traded shares of Common Stock, General Preferred Stock or any other class of capital stock or other security of the Corporation or any other issuer for a day shall mean the last reported sales price, regular way, or, in case no sale takes place on such day, the average of the reported-closing bid and asked prices, regular way, in either case as

reported on the New York Stock Exchange Composite Tape or, if such security is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which such security is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices on each such day in the over-the-counter market as reported through the OTC Bulletin Board (OTCBB) or, if bid and asked prices for such security on each such day shall not have been reported through the OTC Bulletin Board (OTCBB), the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in such security selected for such purpose by the Board of Directors or a committee thereof on each trading day during the Adjustment Period. “ Adjustment Period ” shall mean the period of five (5) consecutive trading days, selected by the Board of Directors or a committee thereof, during the twenty (20) trading days preceding, and including the date as of which the Fair Market Value of a security is to be determined.

* * * * * *

Exhibit 3.3

FORM OF

ADVANCED DRAINAGE SYSTEMS, INC.

SECOND AMENDED AND RESTATED BYLAWS

As amended and restated effective as of ,

ARTICLE I

STOCKHOLDERS

Section 1.01. Annual Meetings . The annual meeting of the stockholders of Advanced Drainage Systems, Inc. (the “ Corporation ”) for the election of directors (each, a “ Director ”) to succeed directors whose terms expire and for the transaction of such other business as properly may come before such meeting shall be held each year, either within or without the State of Delaware, at such place, if any, and on such date and at such time, as may be fixed from time to time by resolution of the Corporation’s Board of Directors (the “ Board of Directors ”) and set forth in the notice or waiver of notice of the meeting. The Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.

Section 1.02. Special Meetings . Special meetings of the stockholders of the Corporation may be called only in the manner set forth in certificate of incorporation of the Corporation (the “ Certificate of Incorporation ”). Notice of every special meeting of the stockholders of the Corporation shall state the purpose or purposes of such meeting. Except as otherwise required by law, the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice. Any special meeting of the stockholders shall be held either within or without the State of Delaware, at such place, if any, and on such date and time, as shall be specified in the notice of such special meeting.

Section 1.03. Participation in Meetings by Remote Communication . The Board of Directors, acting in its sole discretion, may establish guidelines and procedures in accordance with applicable provisions of the General Corporation Law of the State of Delaware, as amended from time to time (the “ DGCL ”) and any other applicable law for the participation by stockholders and proxyholders in a meeting of stockholders by means of remote communications, and may determine that any meeting of stockholders will not be held at any place but will be held solely by means of remote communication. Stockholders and proxyholders complying with such procedures and guidelines and otherwise entitled to vote at a meeting of stockholders shall be deemed present in person and entitled to vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication.

Section 1.04. Notice of Meetings; Waiver .

(a) The Secretary or any Assistant Secretary shall cause notice of each meeting of stockholders to be given in a manner permitted by the DGCL not less than ten nor more than 60 days prior to the meeting, to each stockholder of record entitled to vote at such meeting, subject to such exclusions as are then permitted by the DGCL. The notice shall

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specify (i) the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date of stockholders entitled to notice of the meeting), (ii) the place, if any, date and time of such meeting of the stockholders, (iii) the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, (iv) in the case of a special meeting, the purpose or purposes for which such meeting is called and (v) such other information as may be required by law or as may be deemed appropriate by the Board of Directors, the Chief Executive Officer or the Secretary of the Corporation. If the stockholder list referred to in Section 1.07 of these Bylaws is made accessible on an electronic network, the notice of meeting shall indicate how the stockholder list can be accessed. If a stockholder meeting is to be held solely by means of electronic communications, the notice of such meeting must provide the information required to access such stockholder list.

(b) A written waiver of notice of meeting signed by a stockholder, or a waiver by electronic transmission by a stockholder, whether given before or after the meeting, is deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a waiver of notice. The attendance of any stockholder at a meeting of stockholders is a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business at the meeting on the ground that the meeting is not lawfully called or convened.

Section 1.05. Quorum . Except as otherwise required by law or by the Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority in voting power of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting, provided, however, that where a separate vote by a class or series is required, the holders of a majority in voting power of all issued and outstanding stock of such class or series entitled to vote on such matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter. In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in Section 1.08 of these Bylaws until a quorum shall attend.

Section 1.06. Voting . Except as otherwise provided in the Certificate of Incorporation or by law, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each such share outstanding in his or her name on the books of the Corporation at the close of business on the record date for such vote. If no record date has been fixed for a meeting of stockholders, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote (unless otherwise provided by the Certificate of Incorporation or by applicable law) for each such share of stock outstanding in his or her name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law, the Certificate of Incorporation, these Bylaws, the rules and regulations of any stock exchange applicable to the Corporation, or pursuant to any other rule or regulation applicable to the Corporation or its stockholders, the vote of a majority in voting power of the shares entitled

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to vote at a meeting of stockholders on the subject matter in question represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting. The stockholders do not have the right to cumulate their votes for the election of Directors. As of the effective date of these Bylaws, in accordance with the Certificate of Incorporation, the voting power of the Corporation consists of (except to the extent otherwise required by the laws of the State of Delaware) the holders of outstanding shares of common stock of the Corporation and the holders of outstanding shares of 2.50% Cumulative Convertible Voting Preferred Stock of the Corporation voting together as a single class.

Section 1.07. Voting Lists . The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare, at least 10 days before every meeting of the stockholders (and before any adjournment thereof for which a new record date has been set), a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. This list, which may be in any format including electronic format, shall be open to the examination of any stockholder prior to and during the meeting for any purpose germane to the meeting in the manner required by the DGCL and other applicable law. The stock ledger shall be the only evidence as to who are the stockholders entitled by this Section 1.07 to examine the list required by this Section 1.07 or to vote in person or by proxy at any meeting of stockholders.

Section 1.08. Adjournment . Any meeting of stockholders may be adjourned from time to time, by the chairperson of the meeting or by the vote of a majority in voting power of the shares of stock present in person or represented by proxy at the meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the place, if any, and date and time thereof (and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting) are announced at the meeting at which the adjournment is taken unless the adjournment is for more than 30 days or a new record date is fixed for the adjourned meeting after the adjournment, in which case notice of the adjourned meeting in accordance with Section 1.04 of these Bylaws shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.

Section 1.09. Proxies . Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy. A stockholder may authorize a valid proxy by executing a written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by transmitting or authorizing an electronic transmission setting forth an authorization to act as proxy to the person designated as the holder of the proxy, a proxy solicitation firm or a like authorized agent. No proxy may be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy is revocable at the pleasure of the stockholder executing it unless the proxy states that it is irrevocable and applicable law makes it irrevocable. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary. Proxies by electronic transmission must either set forth or be submitted

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with information from which it can be determined that the electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this Section 1.09 may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

Section 1.10. Organization; Procedure; Inspection of Elections .

(a) At every meeting of stockholders the presiding person shall be the Chairman of the Board or, in the event of his or her absence or disability, the Chief Executive Officer or, in the event of his or her absence or disability, a presiding person chosen by resolution of the Board of Directors. The Secretary, or in the event of his or her absence or disability, the Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding person, shall act as secretary of the meeting. The Board of Directors may make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to any such rules and regulations, the presiding person of any meeting shall have the right and authority to prescribe rules, regulations and procedures for such meeting and to take all such actions as in the judgment of the presiding person are appropriate for the proper conduct of such meetings. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter of business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

(b) Preceding any meeting of the stockholders, the Board of Directors may, and when required by law shall, appoint one or more persons to act as inspectors of elections, and may designate one or more alternate inspectors. If no inspector or alternate so appointed by the Board of Directors is able to act, or if no inspector or alternate has been appointed and the appointment of an inspector is required by law, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. No Director or nominee for the office of Director shall be appointed as an inspector of elections. Each

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inspector, before entering upon the discharge of the duties of an inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall discharge their duties in accordance with the requirements of applicable law.

Section 1.11. Stockholder Action by Written Consent . Except as otherwise provided in the Certificate of Incorporation, stockholders may not take any action by written consent in lieu of action at an annual or special meeting of stockholders.

Section 1.12. Notice of Stockholder Proposals and Nominations .

(a) Annual Meetings of Stockholders .

(i) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (A) pursuant to the Corporation’s notice of the meeting (or any supplement thereto), (B) by or at the direction of the Board of Directors or a Committee appointed by the Board for such purpose, or (C) by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in clauses (ii) and (iii) of this Section 1.12(a) and who is a stockholder of record at the time such notice is delivered and at the date of the meeting.

(ii) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to subclause (C) of Section 1.12(a)(i) of these Bylaws, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business other than nominations must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting (which anniversary date, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, shall be deemed to be ); provided that if the date of the annual meeting is advanced by more than 30 days or delayed by more than 70 days from such anniversary date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than 120 days prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Such stockholder’s notice shall set forth (A) as to each person whom the stockholder proposes to nominate for election or re-election as a Director all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to and in accordance with Section 14(a) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy

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statement as a nominee and to serving as a Director if elected; (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting (including the text of any resolution proposed for consideration and if such business includes proposed amendments to the Certificate of Incorporation or Bylaws, the text of the proposed amendments), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and of any beneficial owner on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and any beneficial owner on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (2) the class or series and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (3) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and (4) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (y) otherwise to solicit proxies from stockholders in support of such proposal or nomination. Notice of a stockholder nomination or proposal shall also set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) a description of any agreement, arrangement or understanding between or among such stockholder and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business; (B) a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or any such beneficial owner or any such nominee with respect to the Corporation’s securities (a “ Derivative Instrument ”); (C) to the extent not disclosed pursuant to the immediately preceding clause (B), the principal amount of any indebtedness of the Corporation or any of its subsidiaries beneficially owned by such stockholder or by any such beneficial owner, together with the title of the instrument under which such indebtedness was issued and a description of any Derivative Instrument entered into by or on behalf of such stockholder or such beneficial owner relating to the value or payment of any indebtedness of the Corporation or any such subsidiary; and (D) any other information relating to such stockholder and any such beneficial owner required to be disclosed in a proxy statement or other filings required to be made in connection with

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solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. The foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his or her intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act, and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a Director of the Corporation. In addition, a stockholder seeking to bring an item of business before the annual meeting shall promptly provide any other information reasonably requested by the Corporation.

(iii) Notwithstanding anything in the second sentence of Section 1.12(a)(ii) of these Bylaws to the contrary, in the event that the number of Directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year’s annual meeting (which anniversary date, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, shall be deemed to be ), a stockholder’s notice under this Section 1.12(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.

(b) Special Meetings of Stockholders . Only such business as shall have been brought before the special meeting of the stockholders pursuant to the Corporation’s notice of meeting shall be conducted at such meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which Directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors or a Committee appointed by the Board for such purpose or (ii) provided that the Board of Directors has determined that the Directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this Section 1.12(b) and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more Directors of the Corporation, any stockholder entitled to vote at such meeting may nominate a person or persons, as the case may be, for election to such position(s) as specified by the Corporation, if the stockholder’s notice as required by Section 1.12(a)(ii) of these Bylaws shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the 120 days prior to such special meeting and not later than the close of

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business on the later of the 90 day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

(i) Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, the presiding person of a meeting of stockholders shall have the power and duty (x) to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 1.12 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made, solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(ii)(C)(4) of this Section 1.12), and (y) if any proposed nomination or business is not in compliance with this Section 1.12, to declare that such defective nomination shall be disregarded or that such proposed business shall not be transacted.

(ii) If the stockholder (or a qualified representative of the stockholder) making a nomination or proposal under this Section 1.12 does not appear at a meeting of stockholders to present such nomination or proposal, the nomination shall be disregarded and/or the proposed business shall not be transacted, as the case may be, notwithstanding that proxies in favor thereof may have been received by the Corporation. For purposes of this Section 1.12, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(iii) For purposes of this Section 1.12, “ public announcement ” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(iv) Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.12. Nothing in this Section 1.12 shall be deemed to affect any rights of (x) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (y) the holders of any series of preferred stock to elect Directors pursuant to any applicable

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provisions of the Certificate of Incorporation or of the relevant preferred stock certificate of designation.

(v) The announcement of an adjournment or postponement of an annual or special meeting does not commence a new time period (and does not extend any time period) for the giving of notice of a stockholder nomination or a stockholder proposal as described above.

ARTICLE II

BOARD OF DIRECTORS

Section 2.01. General Powers . Except as may otherwise be provided by law, by the Certificate of Incorporation or by these Bylaws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers and authority of the Corporation.

Section 2.02. Classification; Election of Directors . The Board of Directors shall be classified into three classes as provided by the Certificate of Incorporation. Except as provided in Section 2.14 of these Bylaws, at each annual meeting of the stockholders the successors of the Directors whose term expires at that meeting shall be elected. At each meeting of the stockholders for the election of Directors, provided a quorum is present, the Directors who are standing for election shall be elected by a plurality of the votes validly cast in such election.

Section 2.03. Annual and Regular Meetings; Notice . The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders either (a) at the place of such annual meeting of the stockholders, in which event notice of such annual meeting of the Board of Directors need not be given, or (b) at such other time and place as shall have been specified in advance notice given to members of the Board of Directors of the date, place and time of such meeting. Any such notice shall be given at least 48 hours in advance if sent to each Director by facsimile or any form of electronic transmission previously approved by a Director, which approval has not been revoked (“ Approved Electronic Transmission ”), or delivered to him or her personally, or at least five days in advance, if notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address. Any such notice need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice (including by Approved Electronic Transmission), whether before or after such meeting. The Board of Directors from time to time may by resolution provide for the holding of regular meetings. Regular meetings of the Board of Directors shall be held at the place (if any), on the date and at the time as shall have been established by the Board of Directors and publicized among all directors. A notice of a regular meeting, the date of which has been so publicized, shall not be required.

Section 2.04. Special Meetings; Notice . Special meetings of the Board of Directors may be called only by or at the direction of the Chairman of the Board, the Chief Executive Officer, the Secretary or a majority of the total number of Directors then in office. Special meetings of

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the Board of Directors shall be held at such place (within or without the State of Delaware), date and time as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on (a) 48 hours’ notice, if such notice is sent by facsimile or Approved Electronic Transmission to each Director or delivered to him or her personally or (b) five days’ notice, if such notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice (including by electronic transmission), whether before or after such meeting. Except as provided in Section 9.01(a), any business may be conducted at a special meeting of the Board of Directors.

Section 2.05. Quorum . A quorum for meetings of the Board of Directors shall consist of a majority of the total number of Directors then in office.

Section 2.06. Voting . Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

Section 2.07. Adjournment . A majority of the Directors present, whether or not a quorum is present, may adjourn any meeting of the Board of Directors to another time or place, provided such adjourned meeting is no earlier than 48 hours after written notice (in accordance with these Bylaws) of such adjournment has been given to the Directors (or such notice is waived in accordance with these Bylaws), and, at any such adjourned meeting, a quorum shall consist of a majority of the total number of Directors then in office.

Section 2.08. Action Without a Meeting . Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by Approved Electronic Transmission, and such writing or writings or Approved Electronic Transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 2.09. Regulations; Manner of Acting . To the extent consistent with applicable law, the Certificate of Incorporation and these Bylaws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. In addition to the election of the Chairman of the Board, the Board may elect one or more vice-chairpersons or lead Directors to perform such other duties as may be designated by the Board.

Section 2.10. Action by Telephonic Communications . Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

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Section 2.11. Removal; Resignation . Directors may only be removed as set forth in the Certificate of Incorporation. Any Director may resign at any time by submitting an electronic transmission or by delivering a written notice of resignation to the Chairman of the Board, the Chief Executive Officer or the Secretary. Such resignation shall take effect upon delivery unless the resignation specifies a later effective date or an effective date determined upon the happening of a specified event.

Section 2.12. Director Fees and Expenses . The amount, if any, which each Director shall be entitled to receive as compensation for his or her services shall be fixed from time to time by the Board of Directors. The non-employee directors of the Corporation shall be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors and may be reimbursed a fixed sum for attendance at each meeting of the Board of Directors, paid an annual retainer or paid other compensation, including equity compensation, as the Board determines.

Section 2.13. Reliance on Accounts and Reports, etc . A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or Committees designated by the Board of Directors, or by any other person as to the matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 2.14. Vacancies and Newly Created Directorships . Except as otherwise provided by law, any vacancy in the Board of Directors that results from the death, disability, resignation, disqualification, removal of any Director or from any other cause may only be filled by the affirmative vote of a majority of the Directors then in office, even if less than a quorum, or by a sole remaining Director. A Director elected to fill a vacancy or newly created directorship shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.

ARTICLE III

COMMITTEES

Section 3.01. How Constituted . The Board of Directors shall have an Executive Committee, a Compensation Committee, an Audit Committee, a Nominating and Corporate Governance Committee and such other committees as the Board of Directors may determine (collectively, the “ Committees ”). Each Committee shall consist of such number of Directors as from time to time may be fixed by a majority of the total number of Directors then in office. Any Committee may be abolished or re-designated from time to time by the Board of Directors. Each member of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his or her successor shall have been designated or until he or she shall cease to be a Director, or until his or her earlier death, resignation or removal.

Section 3.02. Powers . Each Committee shall have such powers and responsibilities as the Board of Directors may from time to time authorize, and each Committee, except as otherwise

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provided in this Section 3.02, shall have and may exercise such powers of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors. No Committee shall have the power or authority to:

(a) amend the Certificate of Incorporation (except that a Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the DGCL, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series);

(b) adopt an agreement to effect a reorganization, recapitalization, share exchange, share reclassification, consolidation, conversion or merger of the Corporation of the Corporation;

(c) recommend to the stockholders the sale, lease, exchange, transfer or other disposition (in one transaction or a series of transactions) of all or substantially all of the Corporation’s property and assets;

(d) recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution; or

(e) amend these Bylaws of the Corporation.

Any Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it.

Section 3.03. Proceedings . Each Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time, provided that the Board of Directors may adopt other rules and regulations for the governance of any Committee not inconsistent with the provisions of these Bylaws. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors following any such proceedings.

Section 3.04. Quorum and Manner of Acting . Except as may be otherwise provided in the resolution creating a Committee, at all meetings of any Committee the presence of members constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members of a Committee present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken at any meeting of any Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes

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are maintained in electronic form. The members of any Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such.

Section 3.05. Action by Telephonic Communications . Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

Section 3.06. Resignations . Any member of any Committee may resign from such Committee at any time by submitting an electronic transmission or by delivering a written notice of resignation to the Chairman of the Board, the Chief Executive Officer or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.

Section 3.07. Removal . Any member of any Committee may be removed from his or her position as a member of such Committee at any time, either for or without cause, by resolution adopted by a majority of the number of Directors then in office.

Section 3.08. Vacancies . If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members shall continue to act, and any such vacancy may be filled by the Board of Directors subject to Section 3.01 of these Bylaws.

ARTICLE IV

OFFICERS

Section 4.01. Number . The officers of the Corporation shall be chosen by the Board of Directors and, subject to the last sentence of this Section 4.01, shall be a Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, one or more Executive Vice Presidents and a Secretary. The Board of Directors may also designate as officers a President, one or more Chief Operating Officers, one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and such other officers and agents as the Board of Directors shall deem necessary or appropriate. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person. The Board may determine that the Chairman of the Board will not be an officer of the Corporation. The Chairman of the Board (whether or not an officer) shall be a Director, but no other officer need be a Director.

Section 4.02. Election . Unless otherwise determined by the Board of Directors and except as otherwise provided in these Bylaws, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors at which his or her successor has been elected and qualified. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

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Section 4.03. Salaries . The salaries and other compensation of all officers and agents of the Corporation shall be fixed by the Board or in the manner established by the Board.

Section 4.04. Removal and Resignation; Vacancies . Any officer may be removed for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Chairman of the Board, the Chief Executive Officer or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors.

Section 4.05. Authority and Duties of Officers . The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be prescribed by the Board of Directors, except that in any event each officer shall exercise such powers and perform such duties as may be required by law. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

Section 4.06. Security . The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board of Directors.

ARTICLE V

CAPITAL STOCK

Section 5.01. Certificates of Stock, Uncertificated Shares . The shares of the Corporation shall be represented by certificates, except to the extent that the Board of Directors has provided by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock in the Corporation represented by certificates shall be entitled to have, and the Board of Directors may in its sole discretion permit a holder of uncertificated shares to receive upon request, a certificate signed by the appropriate officers of the Corporation representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these Bylaws.

Section 5.02. Signatures; Facsimile . All signatures on the certificates referred to in Section 5.01 of these Bylaws may be in facsimile, engraved or printed form, to the extent permitted by law. In case any officer, transfer agent or registrar who has signed, or whose facsimile, engraved or printed signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

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Section 5.03. Lost, Stolen or Destroyed Certificates . A new certificate may be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, only upon delivery to the Corporation of an affidavit of the owner or owners (or their legal representatives) of such certificate, setting forth such allegation and a bond or undertaking as may be satisfactory to a financial officer of the Corporation to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

Section 5.04. Transfer of Stock . Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL. Subject to the provisions of the Certificate of Incorporation and these Bylaws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

Section 5.05. Registered Stockholders . Prior to due surrender of a certificate for registration of transfer and to the fullest extent permitted by law, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests, provided that if a transfer of shares shall be made for collateral security, and not absolutely, this fact shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.

Section 5.06. Transfer Agent and Registrar . The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.

ARTICLE VI

INDEMNIFICATION

Section 6.01. Nature of Indemnity . The Corporation shall indemnify, to the fullest extent permitted by the DGCL and other applicable law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (each, a “ proceeding ”), by reason of the fact that he or she is or was or has agreed to become a Director or officer of the Corporation, or while serving as a Director or officer of the Corporation, is or was serving or has agreed to serve at the request of the Corporation as a Director, officer, employee, manager or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against expenses (including attorneys’

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fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding had no reasonable cause to believe his or her conduct was unlawful; provided that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (i) such indemnification shall be limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (ii) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Notwithstanding the foregoing, but subject to Section 6.05 of these Bylaws, the Corporation shall not be obligated to indemnify a Director or officer of the Corporation in respect of a proceeding (or part thereof) instituted by such Director or officer, unless such proceeding (or part thereof) has been authorized in the specific case by the Board of Directors. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding, had reasonable cause to believe that his or her conduct was unlawful.

Section 6.02. Successful Defense . To the extent that a present or former Director or officer of the Corporation has been successful on the merits or otherwise in defense of any proceeding referred to in Section 6.01 of these Bylaws or in defense of any claim, issue or matter therein, he or she shall be indemnified by the Corporation against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

Section 6.03. Determination That Indemnification Is Proper . Any indemnification of a present or former Director or officer of the Corporation under Section 6.01 of these Bylaws (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of such person is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 6.01 of these Bylaws. Any such determination shall be made, with respect to a person who is a Director or officer at the time of such determination (i) by a majority vote of the Directors who are not parties to such proceeding, even though less than a quorum, or (ii) by a committee of such Directors designated by majority vote of such Directors, even though less than a quorum, or (iii) if there are no such Directors, or if such Directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders.

Section 6.04. Advance of Expenses . Expenses (including attorneys’ fees) incurred by a present or former Director or officer in defending any civil, criminal, administrative or investigative proceeding shall be paid by the Corporation prior to the final disposition of such proceeding upon written request by such person and delivery of an undertaking by such person to repay such amount if it shall ultimately be determined that he or she is not entitled to be

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indemnified by the Corporation under this ARTICLE VI or applicable law; provided that the Board of Directors may not require such Director or officer to post any bond or otherwise provide any security for such undertaking. The Corporation or, in respect of a present Director or officer, the Board of Directors may authorize the Corporation’s counsel to represent (subject to applicable conflict of interest considerations) such present or former Director or officer in any proceeding, whether or not the Corporation is a party to such proceeding.

Section 6.05. Procedure for Indemnification of Directors and Officers . Any indemnification of a Director or officer of the Corporation under Section 6.01 and Section 6.02 of these Bylaws, or advance of expenses to such persons under Section 6.04 of these Bylaws, shall be made promptly, and in any event within 30 days, upon the written request by or on behalf of such person (together with supporting documentation). If a determination by the Corporation that such person is entitled to indemnification pursuant to this ARTICLE VI is required, and the Corporation fails to respond within 60 days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this ARTICLE VI shall be enforceable by such person in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified, to the fullest extent permitted by law, by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of these Bylaws where the required undertaking, if any, has been received by or tendered to the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of these Bylaws, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors or any Committee thereof, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of these Bylaws, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors or any Committee thereof, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 6.06. Contract Right; Non-Exclusivity; Indemnification Priority Survival .

(a) The rights to indemnification and advancement of expenses provided by this ARTICLE VI shall be deemed to be separate contract rights between the Corporation and each Director and officer who serves in any such capacity at any time while these provisions as well as the relevant provisions of the DGCL are in effect and any repeal or modification thereof shall not adversely affect any right or obligation then existing with respect to any state of facts then or previously existing or any proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such “ contract rights ” may not be modified retroactively as to any present or former Director or officer without the consent of such present or former Director or officer.

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(b) The rights to indemnification and advancement of expenses provided by this ARTICLE VI shall continue as to a person who has ceased to be a Director or officer and shall not be deemed exclusive of any other rights to which a present or former Director or officer of the Corporation seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested Directors, or otherwise; provided, however, that to the extent that that an indemnitee is entitled to be indemnified by the Corporation pursuant to this ARTICLE VI and by any stockholder of the Corporation or any affiliate of any such stockholder (other than the Corporation) under any other agreement or instrument, or by any insurer under a policy maintained by such stockholder or affiliate, the obligations of the Corporation pursuant to this ARTICLE VI shall be primary, and the obligations of such stockholder, affiliate or insurer secondary and the Corporation shall not be entitled to contribution or indemnification from or subrogation against such stockholder or affiliate.

(c) The rights to indemnification and advancement of expenses provided by this ARTICLE VI to any present or former Director or officer shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 6.07. Insurance . The Corporation shall purchase and maintain insurance on behalf of any person who is or was or has agreed to become a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a Director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or on his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this ARTICLE VI, provided that such insurance is available on commercially reasonable terms consistent with then prevailing rates in the insurance market.

Section 6.08. Subrogation . In the event of payment under this ARTICLE VI, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the indemnitee, who shall execute all documents, and do all acts, that as the Corporation may reasonably request to secure such rights, including the execution of such documents as the Corporation may reasonably request to enable the Corporation effectively to bring suit to enforce such rights.

Section 6.09. Employees and Agents . The Board of Directors, or any officer authorized by the Board of Directors generally or in the specific case to make indemnification decisions, may cause the Corporation to indemnify any present or former employee or agent of the Corporation in such manner and for such liabilities as the Board of Directors may determine, up to the fullest extent permitted by the DGCL and other applicable law.

Section 6.10. Interpretation; Severability . Terms defined in Sections 145(h) or (i) of the DGCL have the meanings set forth in such sections when used in this ARTICLE VI. If this ARTICLE VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Director or officer as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any proceeding, whether, civil, criminal,

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administrative, investigative or otherwise, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this ARTICLE VI that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE VII

OFFICES

Section 7.01. Registered Office . The registered office of the Corporation in the State of Delaware shall be located at the location provided in the Certificate of Incorporation.

Section 7.02. Other Offices . The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE VIII

GENERAL PROVISIONS

Section 8.01. Dividends . Subject to any applicable provisions of law and the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation’s capital stock. A member of the Board of Directors, or a member of any Committee designated by the Board of Directors shall be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or Committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid.

Section 8.02. Reserves . There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation and the Corporation’s stockholders, and the Board of Directors may similarly modify or abolish any such reserve.

Section 8.03. Execution of Instruments . Except as otherwise provided by law or the Certificate of Incorporation, the Board of Directors may authorize any officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments.

Section 8.04. Action with Respect to Securities of Other Companies . Unless otherwise directed by the Board of Directors, the Chief Executive Officer, or any officer of the Corporation authorized thereby, shall have power to vote and otherwise act on behalf of the Corporation, in

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person or by proxy, at any meeting of stockholders or equityholders of, or with respect to any action of, stockholders or equityholders of any other entity in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other entity.

Section 8.05. Fiscal Year . The fiscal year of the Corporation shall be fixed from time to time by resolution of the Board of Directors.

Section 8.06. Seal . In the discretion of the Board of Directors, the Corporation may have a seal which shall contain the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”. The form of such seal shall be subject to alteration by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

Section 8.07. Books and Records; Inspection . Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors.

Section 8.08. Electronic Transmission . “ Electronic transmission ”, as used in these Bylaws, means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

ARTICLE IX

AMENDMENT OF BYLAWS

Section 9.01. Amendment . Subject to the provisions of the Certificate of Incorporation, these Bylaws may be amended, altered or repealed:

(a) by resolution adopted by three-fourths (75%) of the total number of Directors then in office at any special or regular meeting of the Board of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting;

(b) By resolution adopted by all of the members of the Board of Directors then in office without a meeting in accordance with Section 2.08; or

(c) at any regular or special meeting of the stockholders upon the affirmative vote of the holders of at least three-fourths (75%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote with respect thereto, voting together as a single class, if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting.

Notwithstanding the foregoing, no amendment, alteration or repeal of ARTICLE VI shall adversely affect any right or protection existing under these Bylaws immediately prior to such amendment, alteration or repeal, including any right or protection of a present or former Director

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or officer thereunder in respect of any act or omission occurring prior to the time of such amendment.

ARTICLE X

CONSTRUCTION

Section 10.01. Construction . In the event of any conflict between the provisions of these Bylaws as in effect from time to time and the provisions of the Certificate of Incorporation as in effect from time to time, the provisions of such Certificate of Incorporation shall be controlling.

* * * * * *

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Exhibit 4.3

A DVANCED D RAINAGE S YSTEMS , I NC .

TERMINATION OF AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT

This Termination of Amended and Restated Stockholders’ Agreement (this “ Termination ”) amends, effective as of , 2014, that certain Amended and Restated Stockholders’ Agreement dated as of September 27, 2010 (as amended from time to time, the “ Agreement ”) by and among Advanced Drainage Systems, Inc., a Delaware corporation (“ ADS ”), and the Stockholders (as defined in the Agreement). Capitalized terms used but not defined in this Termination shall have the respective meanings set forth in the Agreement.

WHEREAS, Section 6.4 of the Agreement provides that the Agreement shall not be modified or amended except by written agreement of ADS and each of (a) the American Securities Group (as long as the American Securities Group is a Major Stockholder), (b) the Chlapaty Trustee (as long as the Chlapaty Group is a Major Stockholder) and (c) the holders of not less than seventy-five percent (75%) of the then-outstanding ADS Common Stock held by Stockholders; and

WHEREAS, the undersigned, being ADS and each of (a) the American Securities Group, (b) the Chlapaty Trustee and (c) the holders of not less than seventy-five percent (75%) of the presently-outstanding ADS Common Stock held by Stockholders, desire to amend the Agreement as set forth below.

NOW, THEREFORE, in consideration of the premises, the covenants contained herein, and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the undersigned agree as follows.

§1. Amendment . The Agreement is hereby terminated, canceled and of no further force or effect, effective as of the date first set forth above.

§2. Governing Law . This Termination shall be governed by and construed in accordance with the domestic laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

§3. Counterparts . This Termination may be executed in one or more counterparts (including by means of PDF or facsimile), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the undersigned have executed and delivered this Termination effective as of the date first above written.

ADVANCED DRAINAGE SYSTEMS, INC.


By:
	Mark B. Sturgeon, EVP & CFO	Joseph A. Chlapaty

		JOSEPH A. CHLAPATY TRUST

		By:
			Joseph A. Chlapaty, Trustee

		By:	Fifth Third Bank, Trustee

			By:
			Name:
			Title:

		ASP ADS INVESTCO, LLC

		By:	ASP MANAGER CORP., its Manager

			By:
			Name:
			Title:

Exhibit 4.4

EXECUTION VERSION

ADVANCED DRAINAGE SYSTEMS, INC.

REGISTRATION RIGHTS AGREEMENT

Dated as of , 2014

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT is dated as of , 2014 (this “Agreement”), between Advanced Drainage Systems, Inc., a Delaware corporation (“ADS”), those Persons set forth on Schedule I hereto, and any Person who becomes a party hereto pursuant to the terms of this Agreement.

RECITAL

WHEREAS , the parties hereto wish to set forth certain rights and obligations with respect to the registration of the shares of ADS Common Stock under the Securities Act.

AGREEMENT

In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

Definitions

In addition to the terms defined in the preamble set forth above or elsewhere in this Agreement, as used herein, the following terms shall have the following meanings:

“ ADS Common Stock ” means the outstanding common stock, par value $.01 per share, of ADS.

“ Affiliate ” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such person, including any direct or indirect general partner, managing member, officer or director of such Person or any investment fund now or hereafter existing that is directly or indirectly controlled by one or more direct or indirect general partners or managing members of, or directly or indirectly shares that same management company with, such Person.

“ American Securities Group ” means those Persons identified on Exhibit A attached hereto and the transferees from them of the rights granted hereunder in accordance with Section 2.12 hereof.

“ AS Group Representative” means American Securities LLC, a New York limited liability company, or any successor chosen pursuant to Section 3.1(a) hereof.

“ Capital Securities ” means, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the ownership interests in such Person, including the right to share in profits and losses, the right to receive distributions of cash and property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise control over such Person.

“ Certificate of Incorporation ” means the certificate of incorporation of ADS, as amended from time to time.

“ Chlapaty Group ” means those Persons identified on Exhibit B attached hereto, and the transferees from them of the rights granted hereunder in accordance with Section 2.12 hereof.

“ Chlapaty Group Representative ” means Joseph A. Chlapaty, an individual, or any successor chosen pursuant to Section 3.1(b) hereof.

“ Chlapaty Trustee ” means the trustee(s) of the Joseph A. Chlapaty Trust dated July 9, 1987, as amended from time to time.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect from time to time.

“ IPO ” means an initial underwritten public offering of the ADS Common Stock pursuant to an effective Registration Statement filed under the Securities Act, other than pursuant to a Registration Statement on Form S-4, Form S-8 or any similar or successor form.

“ Major Stockholder ” means (a) the American Securities Group so long as the members of such group together hold at least ten percent (10%) of the aggregate outstanding ADS Common Stock held by Stockholders and (b) the Chlapaty Group so long as the members of such group together hold at least ten percent (10%) of the aggregate outstanding ADS Common Stock held by Stockholders.

“ Material Adverse Change ” or “ Material Adverse Effect ” means an event or condition having a materially adverse effect on the business, assets, condition (financial or otherwise) or results of operations of ADS or the financial, banking or securities markets generally.

“ Person ” means any individual, estate, trust, corporation, partnership, limited liability company, foundation, joint venture, unincorporated organization, association or other entity, and any government, governmental department or agency or political subdivision thereof.

“ Prospectus ” means the prospectus or prospectuses included in any Registration Statement, as amended or supplemented by any prospectus supplement or “free writing prospectus” (as defined in Rule 405 of the Securities Act) with respect to the terms of the offering of any ADS Common Stock covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

The terms “ register ”, “ registered ” and “ registration ” refer to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act and the declaration or ordering of effectiveness of such Registration Statement.

“ Registrable Securities ” means any outstanding shares of ADS Common Stock held by Major Stockholders. As to any particular shares of ADS Common Stock, such shares of ADS Common Stock shall cease to be Registrable Securities when (a) a Registration Statement

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covering such securities has been declared effective by the SEC and such securities have been disposed of pursuant to such effective Registration Statement, (b) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Exchange Act are met, (c) such securities are otherwise transferred and such securities may be resold without subsequent registration under the Securities Act, (d) such securities shall have ceased to be outstanding; or (e) the holder thereof is not or no longer qualifies as a Major Stockholder.

“ Registration Statement ” means any registration statement of ADS which covers any of the ADS Common Stock pursuant to the provisions of this Agreement, including any Prospectus related thereto, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such registration statement.

“ SEC ” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“ SEC Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act.

“ Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect from time to time.

“ Stockholder ” or “ Stockholders ” means all holders of ADS Common Stock.

ARTICLE II

Registration Rights

Section 2.1 Demand Registration . If ADS shall receive from any Major Stockholder or Major Stockholders a written request or requests that ADS effect a registration on Form S-3 with respect to all or part of the Registrable Securities owned by such Major Stockholder or Major Stockholders (or if Form S-3 is not permitted for such registration, then pursuant to a Form S-1 or any successor or similar registration statement (“Form S-1”)), including by means of a shelf registration pursuant to rule 415 under the Securities Act, and ADS is then eligible to register the ADS Common Stock on Form S-3 or Form S-1, as applicable, then ADS shall:

a) Promptly (and in any event within 5 business days after receipt of such request) give written notice of the proposed registration, and any related qualification or compliance, to all other Major Stockholders; and

b) as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Major Stockholder’s or Major Stockholders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Major Stockholder or Major Stockholders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from ADS; provided, however, that no such registration pursuant to this Section 2.1 shall be required: (1) to become effective prior to one hundred eighty (180) days following the effective date of an ADS-initiated registration statement which covers any ADS Common Stock

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(other than a registration statement filed solely to qualify an ADS employee benefit plan or business combination pursuant to Rule 145); provided that ADS is actively employing reasonable efforts in good faith to cause such registration statement to become effective; (2) unless the Major Stockholders propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (before deduction of any underwriters’ discounts or commissions) of at least $10,000,000 with respect to a Registration Statement on Form S-3 or at least $50,000,000 with respect to a Registration Statement on Form S-1; and (3) if, within the twelve (12) month period preceding the date of such request, ADS has already effected two registrations for the Major Stockholders pursuant to this Section 2.1.

c) Subject to the foregoing, ADS shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable (and in any event within 45 days) after receipt of the request or requests of the Major Stockholders.

d) Notwithstanding the provisions of Section 2.1 (a)-(c) above, if any registration requested pursuant to this Section 2.1 is proposed to be effected on Form S-3 and is in connection with an underwritten offering, and if the managing underwriter shall advise ADS in writing that, in its opinion, it is of material importance to the success of such proposed offering to file a Registration Statement on Form S-1 or to include in such Registration Statement information not requested to be included pursuant to Form S-3, then ADS will file a Registration Statement on Form S-1 or supplement Form S-3 as reasonably requested by such managing underwriter.

e) Notwithstanding the provisions of Section 2.1(a)-(d) above, if ADS furnishes to the Major Stockholders requesting a registration pursuant to this Section 2 a certificate signed by ADS’ chief executive officer stating that in the good faith judgment of ADS’s Board of Directors (after consultation with legal counsel) it would be materially detrimental to ADS and its Stockholders for such Registration Statement to be filed, become effective or continue to be used, including a shelf registration pursuant to Rule 415 under the Securities Act, because such action would (i) materially interfere with ADS’s ability to effect a material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction involving ADS; (ii) require premature disclosure of material, non-public information that ADS has a bona fide business purpose for preserving as confidential (which disclosure would be required to be made in any Registration Statement so that such Registration Statement would not be materially misleading and would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement); or (iii) render ADS unable to comply with requirements under the Securities Act or Exchange Act, then ADS may, upon giving prompt written notice of such action to the Major Stockholders participating in such registration, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement; provided that if ADS exercises its rights under this Section 2.1(e), the applicable time period during which the Registration Statement is to remain effective shall be extended by a period of time equal to the duration of the period during which such Registration Statement is suspended hereunder; provided, further that ADS shall not be permitted to do so (a) more than once during any consecutive twelve (12) month period, or (b) for a period exceeding forty-five (45) days on any one occasion. In the event ADS exercises its rights under the preceding sentence, such Major Stockholders agree to suspend, promptly upon their receipt of the notice

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referred to above, their use of any prospectus relating to such registration in connection with any sale or offer to sell Registrable Securities for the period during which suspension by ADS is permitted hereby. ADS shall promptly notify such Major Stockholders of the expiration of any period during which it exercised its rights under this Section 2.1. ADS agrees that, in the event it exercises its right sunder this Section 2.1, it shall, within 30 days following such Major Stockholders’ receipt of the notice of suspension, update the suspended statement as may be necessary to permit the Major Stockholders to resume use thereof in connection with the offer and sale of their Registrable Securities in accordance with applicable law.

Section 2.2 ADS Registration .

a) If at any time ADS, directly or indirectly through an Affiliate, determines to register any ADS Common Stock under the Securities Act in connection with the public offering of such securities solely for cash on a form that would also permit the registration of any ADS Common Stock held by a member of the American Securities Group or the Chlapaty Group, ADS shall, at each such time, promptly give each party hereto written notice of such determination setting forth the date on which ADS proposes to file such registration statement. Upon the written request of any party hereto received by ADS within thirty (30) days from the date of such notice by ADS, ADS shall use its best efforts to cause to be registered under the Securities Act all of the ADS Common Stock that each such party has requested be registered. ADS shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not a member of the American Securities Group or the Chlapaty Group has elected to include Registrable Securities in such registration. The expenses of such withdrawn registration shall be borne by ADS in accordance with Section 2.6.

b) The provisions of Section 2.2 (a) shall not apply to any registration (i) on Form S-4 or Form S-8 or any successor forms thereto or (ii) in which the only stock being registered is ADS Common Stock issuable upon conversion of debt securities that are also being registered.

Section 2.3 Underwriting Requirements .

a) If, pursuant to Section 2.1, the initiating Major Stockholders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise ADS as a part of their request made pursuant to Section 2.1. The underwriter(s) will be selected by ADS and shall be reasonably acceptable to the initiating Major Stockholders. In such event, the right of any Major Stockholder to include such Major Stockholder’s Registrable Securities in such registration shall be conditioned upon such Major Stockholder’s participation in such underwriting and the inclusion of such Major Stockholder’s Registrable Securities in the underwriting to the extent provided herein. All Major Stockholders proposing to distribute their securities through such underwriting shall (together with ADS) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Subsection 2.3, if the managing underwriter(s) advise(s) ADS in writing that marketing factors require a limitation on the number of shares to be underwritten, then ADS shall so advise all Major Stockholders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable

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Securities that may be included in the underwriting shall be allocated among such Major Stockholders of Registrable Securities, including the initiating Major Stockholders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Major Stockholder or in such other proportion as shall mutually be agreed to by all such selling Major Stockholders. To facilitate the allocation of shares in accordance with the above provisions, ADS or the underwriters may round the number of shares allocated to any Major Stockholder to the nearest 100 shares.

b) In connection with any offering involving an underwriting of shares of ADS’s Capital Securities pursuant to Section 2.2, ADS shall not be required to include any of the Major Stockholders’ Registrable Securities in such underwriting unless the Major Stockholders accept the terms of the underwriting as agreed upon between ADS and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by ADS. If the total number of securities, including Registrable Securities, requested by Major Stockholders to be included in such offering exceeds the number of securities to be sold (other than by ADS) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then ADS shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and ADS in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Major Stockholders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Major Stockholder or in such other proportions as shall mutually be agreed to by all such selling Major Stockholders. To facilitate the allocation of shares in accordance with the above provisions, ADS or the underwriters may round the number of shares allocated to any Major Stockholder to the nearest 100 shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by ADS) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below twenty percent (20%) of the total number of securities included in such offering.

c) For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provision in Section 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Major Stockholders have requested to be included in such registration statement are actually included.

Section 2.4 Obligations of ADS . Whenever required under this Section 2 to use its best efforts to effect the registration of any ADS Common Stock (including Registrable Securities), as applicable, ADS shall:

a) Prepare and file with the SEC a Registration Statement with respect to such ADS Common Stock and use its best efforts to cause such Registration Statement to become and remain effective for a period of not less than 120 days or until the distribution contemplated in the Registration Statement has been completed (if sooner) (or in the case of a shelf registration pursuant to rule 415 under the Securities Act, for a period ending on the earlier of the date on which all Registrable Securities have been sold pursuant to such shelf registration

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(but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder) or have otherwise ceased to be Registrable Securities); provided, however , that ADS shall in no event be obligated to cause any such registration to remain effective for more than nine (9) months and provided further that in the case of any registration of Registrable Securities on Form S-3 that is intended to be offered on a continuous or delayed basis, such nine (9) month period shall be extended for up to ninety (90) days, if necessary, to keep the Registration Statement effective until all such ADS Common Stock has been sold, provided that Rule 415 under the Securities Act, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis;

b) As expeditiously as reasonably possible, prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement;

c) As expeditiously as reasonably possible, furnish to the Major Stockholders such numbers of copies of a Prospectus, including a preliminary Prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of ADS Common Stock owned by them;

d) As expeditiously as reasonably possible, use its best efforts to register and qualify the securities covered by such Registration Statement under such securities or Blue Sky laws of such jurisdictions as the selling Major Stockholders shall reasonably request for the distribution of the securities covered the Registration Statement; provided that ADS shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdiction; and provided, further, that (anything in this Agreement to the contrary notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the securities shall be qualified shall require that expenses incurred in connection with the qualification of the securities in that jurisdiction be borne by selling stockholders, then such expenses shall be payable by the Major Stockholders who are selling stockholders pro rata, to the extent required by such jurisdiction;

e) In the event of any underwritten public offering, use best efforts to enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering and, in connection therewith, ADS shall cooperate with the underwriter and shall attend such meetings and travel to such places to aid in the marketing of such underwritten public offering as the underwriters may reasonably request;

f) Notify each holder of Registrable Securities covered by such Registration Statement at any time when the Company is notified or becomes aware that a Prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

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g) Use best efforts to cause all such Registrable Securities registered pursuant hereto be listed on each securities exchange on which similar securities issued by ADS are then listed;

h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration statement; and

i) In the event of an underwritten public offering, use best efforts to obtain, at the request of any holder requesting registration of Registrable Securities pursuant to this Agreement, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration effected pursuant to this Agreement, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the Registration Statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing ADS for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the holders requesting registration of Registrable Securities, and (ii) a letter, dated such date, from the independent certified public accountants of ADS, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the holders requesting registration of the Registrable Securities (unless such independent certified public accountants shall be prohibited from so addressing such letters to the holders requesting registration by applicable standards of the accounting profession).

Section 2.5 Obligations of the Major Stockholders . It shall be a condition precedent to the obligations of ADS to take any action pursuant to this Agreement that the selling Major Stockholders shall furnish to ADS such information regarding themselves, the ADS Common Stock held by them, and the intended method of disposition of such securities as ADS shall reasonably request and as shall be required in connection with the action to be taken by ADS; provided , however , that under no circumstances will any Major Stockholder be obligated to make representations or provide indemnities except with respect to information reasonably required with respect to itself, the securities proposed to be sold by it and the intended method of disposition of such securities by such holder, or such other representations as required by law.

Section 2.6 Expenses of Registration . All expenses incurred in connection with a registration pursuant to this Section 2 (excluding stock transfer taxes and underwriters’ discounts and commissions, which shall be borne by the holders of the applicable Registrable Securities), including without limitation all registration, filing and qualification fees, printers’ and accounting fees (including the cost of “cold comfort” letters, if required), fees and disbursements of counsel for ADS, in addition to reasonable fees and disbursements, not to exceed $100,000, of one (1) special counsel for the requesting Major Stockholders (which counsel shall be selected by such requesting Major Stockholders) shall be borne by ADS; provided, however , that ADS shall not be required to pay for any expenses of any proposed registration begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the requesting Major Stockholders. In such instance, the requesting Major Stockholders shall be severally liable for such expenses unless such Major Stockholders agree to forfeit the collective right of such Major Stockholders to any demand registration or demand

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registrations then available pursuant to Section 2.1. Notwithstanding the foregoing, the requesting Major Stockholders may withdraw a request made within forty-five (45) days following the end of a fiscal year if a Material Adverse Change has occurred and the requesting Major Stockholders had no knowledge of or information related to a Material Adverse Change at the time of the registration request, in which event the Major Stockholders shall not be required to pay any of the expenses and shall not forfeit their right to demand registrations pursuant to Section 2.1.

Section 2.7 No Delay of Registration . No Stockholder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

Section 2.8 Indemnification . In the event any shares of ADS Common Stock (including Registrable Securities) are included in a Registration Statement under Section 2, the provisions of this Section 2.8 shall apply.

a) To the extent permitted by law, ADS will indemnify and hold harmless each Major Stockholder requesting or joining in a registration, any underwriter (as defined in the Securities Act) for it, and each Person, if any, who controls such Major Stockholder or such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on any untrue or alleged untrue statement of any material fact contained in such Registration Statement, including any preliminary or final prospectus contained therein or any amendments or supplements thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, and will reimburse each such Major Stockholder, underwriter or controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however , that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of ADS (which consent shall not be unreasonably withheld) nor shall ADS be liable to any Major Stockholder, underwriter or controlling Person of either for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or omission made in connection with such Registration Statement, preliminary or final prospectus or amendments or supplements thereto in reliance upon and in conformity with written information furnished for use in connection with such registration by such Major Stockholder, underwriter or controlling Person.

b) To the extent permitted by law, each Major Stockholder requesting or joining in a registration will indemnify and hold harmless ADS, each of its directors, each of its officers who has signed the Registration Statement, each Person, if any, who controls ADS within the meaning of the Securities Act, and each agent and any underwriter for ADS (within the meaning of the Securities Act) against any losses, claims, damages or liabilities to which ADS or any such director, officer, controlling person, agent or underwriter may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or

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actions in respect thereto) arise out of or are based upon any untrue statement of any material fact contained in such Registration Statement, including any preliminary or final prospectus contained therein or any amendments or supplements thereto, or arise out of or are based upon the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission was made in such Registration Statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by such Major Stockholder expressly for use in connection with such registration; and such Major Stockholder will reimburse any legal or other expenses reasonably incurred by ADS or any such director, officer, controlling Person, agent, or underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement described in this Section 2.8(b) shall not apply to amounts paid in settlements effected without the consent of such Major Stockholder (which consent shall not be unreasonably withheld).

c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties. In the event that the indemnifying parties cannot mutually agree as to the selection of counsel, each indemnifying party may retain separate counsel to act on its behalf. The indemnified party shall in all events be entitled to participate in such defense at its expense through its own counsel. In the further event that an indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to one or more of the indemnifying parties, then such indemnified party shall have the right to act on its own behalf through counsel of its own selection and the indemnifying party shall pay such counsel fees. The failure to notify an indemnifying party promptly of the commencement of any such action, if prejudicial in any material respect to its ability to defend such action, shall relieve such indemnifying party of its liability to the indemnified party under this Section 2.8 to the extent, but only to the extent, that the indemnified party was prejudiced by the delay, but the omission so to notify the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section.

d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified

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party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no Major Stockholder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Major Stockholder pursuant to such registration statement, and (y) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Major Stockholder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Major Stockholder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Major Stockholder (net of any selling expenses paid by such Major Stockholder), except in the case of willful misconduct or fraud by such Major Stockholder.

e) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of ADS and the Major Stockholders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

Section 2.9 Termination of Registration Rights . No Major Stockholder shall be entitled to exercise any right provided for in this Section 2 after the date on which such Major Stockholder no longer holds any Registrable Securities.

Section 2.10 Reports Under Exchange Act . With a view to making available to the Major Stockholders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Major Stockholder to sell securities of ADS to the public without registration or pursuant to a registration on Form S-3, ADS shall:

a) Make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by ADS for the IPO;

b) Use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of ADS under the Securities Act and the Exchange Act (at any time after ADS has become subject to such reporting requirements); and

c) Furnish to any Major Stockholder, so long as the Major Stockholder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by ADS that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by ADS for the IPO), the Securities Act, and the Exchange Act (at any time after ADS has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold

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pursuant to Form S-3 (at any time after ADS so qualifies) and (ii) such other information as may be reasonably requested in availing any Major Stockholder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after ADS has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after ADS so qualifies to use such form).

Section 2.11 Limitations in Connection with Future Grants or Registration Rights . Except as set forth in Section 2.12, from and after the date of this Agreement, ADS shall not, without the prior written consent of both Major Stockholders, enter into any agreement with any holder or prospective holder of any securities of ADS that would provide to such holder the right to include securities in any registration on other than either a pro rata basis with respect to the Registrable Securities or on a subordinate basis after all Major Stockholders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include.

Section 2.12 Assignment of Registration Rights . The rights granted under this Agreement may be assigned (but only with all related obligations) by: (i) a Stockholder (a) to his spouse, his descendants, any religious, charitable or educational organization, a trust of which such Stockholder, or any of these other Persons or entities, or any combination thereof, are primary beneficiaries (such Stockholder, any such other person or entity, and each settlor of the trust, each a “Permitted Beneficiary”), (b) to any Permitted Beneficiary of such Stockholder that is a trust (determined, for this purpose, as if any settlor of the trust was the Stockholder), or (c) to any other Stockholder who is defined herein as being a member of either the American Securities Group or Chlapaty Group, if such transferring Stockholder is also a member of that same group; (ii) a Major Stockholder to its employees or employees of the Major Stockholder’s Affiliates; (iii) a Major Stockholder to its Affiliates; or (iv) a Stockholder who is a member of the American Securities Group to the limited partners, co-investors, officers or consultants of a member of the American Securities Group; conditioned, in each of subsections (i)-(iv), upon the execution and delivery of a joinder agreement, in a form and substance reasonably acceptable to ADS.

ARTICLE III

Miscellaneous

Section 3.1 Action of Major Stockholders .

a) Each member of the American Securities Group hereby irrevocably appoints the AS Group Representative as its true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, in its name, place and stead, in all capacities regarding any matter under this Agreement or otherwise relating to this Agreement, including (i) granting any consent or approval or exercising any right on behalf of the American Securities Group, and each member thereof, (ii) accepting notices on behalf of the American Securities Group, and each member thereof and (iii) executing and delivering, on behalf of the American Securities Group, and each member thereof, any and all notices, documents or certificates to be executed by the American Securities Group, and each member thereof, in connection with the transactions contemplated by the Agreement. As the representative of the American Securities Group, the AS Group Representative shall act as the agent for the American Securities Group, and each member thereof, and shall have authority to bind each such member, and the parties to this Agreement

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may rely on such appointment and authority until the receipt of notice of the appointment of a successor upon five (5) business days’ prior written notice by each member of the American Securities Group to ADS and the Chlapaty Group. Each member of the American Securities Group agrees that any decision, act, consent or instruction of the AS Group Representative (acting in its capacity as the AS Group Representative and pursuant to the authority expressly granted to it under this Agreement) shall constitute a decision of the American Securities Group and, except to the extent the terms of any such decision, act, consent or instruction otherwise expressly provide, shall be final, binding and conclusive upon each member of the American Securities Group, and the parties to this Agreement may rely upon any such decision, act, consent or instruction of the AS Group Representative as being the decision, act, consent or instruction of the American Securities Group. Each of the parties hereto shall be entitled to conclusively rely on actions taken by the AS Group Representative for purposes of actions to be taken by or on behalf of the American Securities Group, and each member of the American Securities Group, pursuant to this Agreement. For the avoidance of doubt, valid action of the American Securities Group under this Agreement shall only require the consent of the AS Group Representative.

b) Each member of the Chlapaty Group hereby irrevocably appoints the Chlapaty Group Representative as its true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, in its name, place and stead, in all capacities regarding any matter under this Agreement or otherwise relating to this Agreement, including (i) granting any consent or approval or exercising any right on behalf of the Chlapaty Group, and each member thereof, (ii) accepting notices on behalf of the Chlapaty Group, and each member thereof and (iii) executing and delivering, on behalf of the Chlapaty Group, and each member thereof, any and all notices, documents or certificates to be executed by the Chlapaty Group, and each member thereof, in connection with the transactions contemplated by the Agreement. As the representative of the Chlapaty Group, the Chlapaty Group Representative shall act as the agent for the Chlapaty Group, and each member thereof, and shall have authority to bind each such member, and the parties to this Agreement may rely on such appointment and authority until the receipt of notice of the appointment of a successor upon five (5) business days’ prior written notice by each member of the Chlapaty Group to ADS and the American Securities Group. Each member of the Chlapaty Group agrees that any decision, act, consent or instruction of the Chlapaty Group Representative (acting in its capacity as the Chlapaty Group Representative and pursuant to the authority expressly granted to it under this Agreement) shall constitute a decision of the Chlapaty Group and, except to the extent the terms of any such decision, act, consent or instruction otherwise expressly provide, shall be final, binding and conclusive upon each member of the Chlapaty Group, and the parties to this Agreement may rely upon any such decision, act, consent or instruction of the Chlapaty Group Representative as being the decision, act, consent or instruction of the Chlapaty Group. Each of the parties hereto shall be entitled to conclusively rely on actions taken by the Chlapaty Group Representative for purposes of actions to be taken by or on behalf of the Chlapaty Group, and each member of the Chlapaty Group, pursuant to this Agreement. For the avoidance of doubt, valid action of the Chlapaty Group under this Agreement shall only require the consent of the Chlapaty Group Representative.

Section 3.2 After-Acquired Shares . For the avoidance of doubt, the parties hereto acknowledge and agree that the provisions of this Agreement shall apply to all shares of ADS Common Stock or, as applicable, other ADS Capital Securities, held by a Stockholder who is a party to this Agreement, whether held as of the date hereof or acquired on any date thereafter.

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Section 3.3 Remedies . The parties to this Agreement acknowledge and agree that breach of any of the covenants of ADS or the Stockholders who are party to this Agreement set forth in this Agreement are not compensable by payment of money damages and, therefore, that such covenants set forth in this Agreement may be enforced in equity by a decree requiring specific performance. Without limiting the foregoing, if any dispute arises concerning the transfer of any ADS Capital Securities subject to this Agreement, the parties to this Agreement agree that an injunction may be issued restraining the sale or other transfer of such Capital Securities or rescinding any such sale or other transfer, pending resolution of such controversy. Such remedies shall be cumulative and non-exclusive and shall be in addition to any other rights and remedies the parties may have under this Agreement.

Section 3.4 Entire Agreement; Amendment . This Agreement, together with the Schedules and Exhibits hereto, sets forth the entire understanding of the parties, and supersedes all prior agreements, arrangements and communications, whether oral or written, with respect to the subject matter hereof, including Section 5 of that certain Amended and Restated Stockholders’ Agreement, dated as of September 27, 2010, by and among ADS and the Persons set forth on Schedule I thereto. This Agreement shall not be modified or amended except by written agreement of ADS and each of (a) the American Securities Group (as long as the American Securities Group is a Major Stockholder) and (b) the Chlapaty Trustee (as long as the Chlapaty Group is a Major Stockholder). Captions appearing in this Agreement are for convenience only and shall not be deemed to explain, limit or amplify the provisions hereof.

Section 3.5 Severability . The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if the invalid or unenforceable provision were omitted.

Section 3.6 Notices . Any notice or other instrument or thing required or permitted to be given, served or delivered to any of the parties hereto shall be in writing and shall be deemed to have been given, served or delivered when personally delivered to, or seventy two (72) hours after being deposited in the United States mails, registered and with proper postage prepaid, addressed to ADS at 4640 Trueman Boulevard, Hilliard, Ohio 43026, Attention: Joseph A. Chlapaty, Chairman and CEO, and to a Stockholder at its address on Schedule I or at such other address as such Stockholder may designate by ten (10) days advance written notice to ADS.

Section 3.7 Assignment . This Agreement is not assignable in whole or in part except (a) in accordance with the terms of this Agreement, (b) in the event of the death of any of the individual Stockholders, his rights and obligations hereunder shall be transferred to his respective estate or personal representative so long as such estate or personal representative holds shares of ADS Common Stock or (c) the rights and obligations hereunder of any trustee who is a Stockholder shall be transferred to the successor trustee of such trustee.

Section 3.8 Governing Law . This Agreement shall be governed by and construed under the internal laws of the State of Delaware.

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Section 3.9 No Third Party Beneficiaries . Except as set forth in Section 2.8, nothing contained in this Agreement is intended to be for the benefit of or enforceable by any Person, other than the parties hereto, and their respective heirs, personal representatives, successors and assigns.

Section 3.10 Counterparts; Facsimile Signatures . This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one instrument. This Agreement may be executed by facsimile signature(s).

Section 3.11 Construction . The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The word “any” shall mean “any and all” unless otherwise clearly indicated by context. Where any party’s consent is required hereunder, except as otherwise specified herein, such party’s consent may be granted or withheld in such party’s sole discretion. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any laws herein shall be construed as referring to such laws as from time to time enacted, repealed or amended, (c) any reference herein to any person shall be construed to include the person’s successors and assigns, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (e) all references herein to Sections or Exhibits, unless otherwise specifically provided, shall be construed to refer to Sections and Exhibits of this Agreement.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as of the date first above written.


ADVANCED DRAINAGE SYSTEMS, INC.

By:
		Joseph A. Chlapaty,
		Chairman and Chief Executive Officer


JOSEPH A. CHLAPATY TRUST

By:
		Joseph A. Chlapaty, Trustee

By:		Fifth Third Bank, Trustee

By:
		(Name) (Title)


Joseph A. Chlapaty

KEVIN CHLAPATY IRREVOCABLE TRUST ONE

By:
		Kevin Chlapaty, Trustee


Kevin Chlapaty

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KEITH CHLAPATY IRREVOCABLE TRUST ONE

By:
		Keith Chlapaty, Trustee


Keith Chlapaty

ASP ADS INVESTCO, LLC

By:		ASP MANAGER CORP., its Manager

By:
Name:
Title:

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EXHIBIT A

Initial Members of the American Securities Group:

ASP ADS Investco, LLC, a Delaware limited liability company

A-1

EXHIBIT B

Initial Members of the Chlapaty Group:

Joseph A. Chlapaty

Trustee(s) of Joseph A. Chlapaty Trust dated July 9, 1987, as amended from time to time

Trustee(s) of Kevin Chlapaty Irrevocable Trust One dated September 20, 1994

Trustee(s) of Keith Chlapaty Irrevocable Trust One dated September 20, 1994

Kevin Chlapaty

Keith Chlapaty

B-1

SCHEDULE I


Name	Address
Joseph A. Chlapaty and Fifth Third Bank, as Trustees of the Joseph A. Chlapaty Trust dated July 9, 1987, as amended from time to time	Use address on file with Advanced Drainage Systems, Inc.

Joseph A. Chlapaty	Use address on file with Advanced Drainage Systems, Inc.

Kevin Chlapaty, Trustee of the Kevin Chlapaty Irrevocable Trust One dated September 20, 1994	Use address on file with Advanced Drainage Systems, Inc.

Keith Chlapaty, Trustee of the Keith Chlapaty Irrevocable Trust One dated September 20, 1994	Use address on file with Advanced Drainage Systems, Inc.

Kevin Chlapaty	Use address on file with Advanced Drainage Systems, Inc.

Keith Chlapaty	Use address on file with Advanced Drainage Systems, Inc.

American Securities LLC, as AS Group Representative, on behalf of each member of the American Securities Group	American Securities LLC 299 Park Avenue, 34th Floor New York, NY 10171 Attn: David Horing, Managing Director Eric Schondorf, General Counsel Fax: 212.697.5524	With a copy to: Kaye Scholer LLP 425 Park Avenue New York, NY 10122 Attn: Emanuel Cherney, Esq. Fax: 212.836.8689 echerney@kayescholer.com

Schedule I-1

Exhibit 10.8

ADVANCED DRAINAGE SYSTEMS, INC.

Non-Employee Director Compensation Plan

1.	Purpose

The purpose of the Plan is to advance the long-term interests of Advanced Drainage Systems, Inc. by (i) motivating Directors by means of long-term incentive compensation, (ii) furthering the identity of interests of Directors with those of the shareholders of the Corporation through the ownership and performance of the Common Stock of the Corporation and (iii) permitting the Corporation to attract and retain Directors upon whose judgment the successful conduct of the business of the Corporation largely depends. Toward this objective, the Committee may establish the amount of annual cash retainers and grant restricted stock and other Awards to Directors of the Corporation on the terms and subject to the conditions set forth in the Plan.

2.	Definitions

2.1 “Administrative Policies” means the administrative policies and procedures adopted and amended from time to time by the Committee to administer the Plan.

2.2 “Award” means an award of cash compensation, restricted stock, or shares of Common Stock granted under the Plan to a Participant by the Committee pursuant to such terms, conditions, restrictions and limitations, if any, as the Committee may establish by the Award Agreement or otherwise.

2.3 “Award Agreement” means a written agreement with respect to an Award between the Corporation and a Participant establishing the terms, conditions, restrictions, and limitations applicable to an Award. To the extent an Award Agreement is inconsistent with the terms of the Plan, the Plan shall govern the rights of the Participant thereunder.

2.4 “Board” means the Board of Directors of the Corporation.

2.5 A “Change In Control” of the Corporation means the occurrence of a transaction or series of transactions following which less than a majority of the voting power of the Corporation or a Successor Entity is held by the Persons who hold the same with respect to the Corporation immediately prior to such transaction or series of transactions.

2.6 “Committee” means the Compensation and Management Development Committee of the Board.

2.7 “Common Stock” means Common Stock of the Corporation.

2.8 “Corporation” means Advanced Drainage Systems, Inc.

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2.9 “Director” means a member of the Corporation’s Board who is not an employee of the Corporation.

2.10 “Participant” means any Director to whom an Award has been granted by the Committee under this Plan.

2.11 “Person” means any individual, legal entity, partnership, estate, trust, association, organization or governmental body.

2.12 “Plan” means the Advanced Drainage Systems, Inc. Non-Employee Director Compensation Plan.

2.13 “Successor Entity” means any successor entity to the Corporation in a merger of the Corporation, in a sale of all or substantially all of the assets of the Corporation or in any other such transaction involving the Corporation.

3.	Administration

The Plan shall be administered by the Committee. Subject to the express provisions of this Plan, the Committee shall have conclusive authority to construe and interpret the Plan, any Award Agreement entered into hereunder and to establish, amend and rescind Administrative Policies for the administration of this Plan.

4.	Eligibility

Any Director is eligible to become a Participant in the Plan.

5.	Shares Available

The aggregate number of shares of Common Stock of the Corporation as to which restricted stock Awards (in the aggregate) may be made shall be Sixty Thousand (60,000); provided, however, that whatever number of shares shall remain reserved for issuance pursuant to the Plan at the time of any stock split, stock dividend, or other change in the Corporation’s capitalization shall be appropriately and proportionately adjusted to reflect such stock dividend, stock split or other change in capitalization. Such shares shall be made available from authorized but unissued or reacquired shares of the Corporation. Any shares for which an Award is granted hereunder that are released from such Award for any reason shall become available for other Awards to be granted under this Plan.

Term

The Plan shall become effective upon adoption of the Plan by the Committee.

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7.	Participation

All Directors shall automatically be Participants in the Plan. The Committee shall determine the type or types of Awards to be made to a Participant, or may permit the Participant to choose between types of Awards. The terms, conditions, and restrictions of each Award shall be set forth in an Award Agreement.

8.	Restricted Stock Awards

(a) Grants . Awards may be granted in the form of Awards of restricted stock in such numbers and at such times as the Committee shall determine. Except as otherwise set forth in an Award Agreement or on Exhibit A hereto, annual Awards of restricted stock will be made to all Directors in the amount of $75,000 of Common Stock. Such Awards will be made on the date of the annual meeting of the Corporation’s stockholders, will be valued as of the grant date, and will be subject to forfeiture in the event that the Director ceases to serve as a Director during the one-year period ending on the anniversary of the grant date, subject to any Administrative Policies adopted pursuant to Section 11 hereof. The terms of the initial Awards of shares of restricted stock, including the date of grant and the date on which the risk of forfeiture with respect to such shares will lapse, are set forth on Exhibit A.

(b) Award Restrictions . Awards of restricted stock shall be subject to such terms, conditions, restrictions, or limitations as the Committee deems appropriate including, by way of illustration but not by way of limitation, restrictions on transferability, requirements of continued service as a Director, or the financial performance of the Corporation. The Committee may modify, or accelerate the termination of, the restrictions applicable to an Award of restricted stock under such circumstances as it deems appropriate.

(c) Rights as Shareholders . During the period in which any restricted shares of Common Stock are subject to the restrictions imposed under the preceding paragraphs, and except as otherwise provided by the Committee in an Award Agreement, the Participant to whom such restricted shares have been awarded shall have all of the rights of a shareholder with respect to such shares, including, by way of illustration but not by way of limitation, the right to vote such shares and to receive dividends.

(d) Change in Control . Except as otherwise provided in an Award Agreement, all Awards of restricted stock shall immediately vest and no longer be subject to forfeiture in the event of a Change in Control of the Corporation.

(e) Evidence of Award . Any Award of restricted stock granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates.

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9.	Share Awards

(a) Grants . Awards may be granted in the form of unrestricted shares of Common Stock.

(b) Additional Terms and Conditions . The Committee may, consistent with the terms of this Plan, by way of the Award Agreement or otherwise, determine the manner of payment of Awards of Shares and other terms, conditions, restrictions or limitations, if any, on any Award of Shares.

10.

Awards of Cash Compensation

The amount of cash compensation to be paid to Directors is set forth on Exhibit A to this Plan and may be modified from time to time by the Committee. The Committee may permit a Director to elect in writing to receive, in lieu of all or a portion of their cash compensation, awards of restricted stock, with a value, determined at the time of grant, equal to such foregone cash compensation.

11.

Termination of Service as Director

The Committee shall adopt Administrative Policies determining the treatment of Awards of restricted stock of Participants who cease to serve as a Director whether because of death, disability, resignation, retirement pursuant to an established retirement plan or policy of the Corporation, or for any other reason.

12.

Assignment and Transfer

The rights and interests of a Participant under the Plan may not be assigned, encumbered or transferred except, in the event of the death of a Participant, by will or the laws of descent and distribution, except as may be explicitly set forth in an Award Agreement.

13.

Adjustments Upon Changes in Capitalization

In the event of any change in the outstanding shares of Common Stock by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares merger, consolidation or any change in the corporate structure or shares of the Corporation, the maximum aggregate number and class of shares as to which Awards may be granted under the Plan shall be appropriately adjusted by the Committee whose determination shall be final.

14.

Regulatory Approvals and Listings

Notwithstanding anything contained in this Plan to the contrary, the Corporation shall have no obligation to issue or deliver certificates of Common Stock evidencing Awards of restricted stock or any other Award payable in Common Stock prior to (a) the obtaining of any approval from any governmental agency which the Corporation shall, in its sole discretion, determine to be

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necessary or advisable, and (b) the completion of any registration or other qualification of said shares under any state or federal law, or ruling of any governmental body, that the Corporation shall, in its sole discretion, determine to be necessary or advisable.

15.

Amendment

The Corporation, by action of the Board, reserves the right to amend, modify or terminate at any time this Plan or, by action of the Committee or the Board with the consent of the Participant, to amend, modify, or terminate any Award Agreement.

16.

Governing Law

The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, except as preempted by applicable Federal law.

17.

No Right, Title, or Interest In Corporation Assets

No Participant shall have any rights as a shareholder as a result of participation in the Plan until the date of issuance of a stock certificate in his or her name. To the extent any person acquires a right to receive payments from the Corporation under this Plan, such rights shall be no greater than the rights of an unsecured creditor of the Corporation.

18.

Expiration of Plan

Awards may be granted under this Plan at any time prior to 10 years from adoption of the Plan by the Committee, on which date the Plan shall expire but without affecting any Awards then outstanding.

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EXHIBIT A

ADVANCED DRAINAGE SYSTEMS, INC.

SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION POLICY ¹


Annual Cash Retainers (Payable Quarterly)
Board of Directors
Chairman of the Board	$	n/a-employee
Board Members (other than Chairman)	$	75,000
Audit Committee
Audit Committee Chairman	$	10,000
Audit Committee Members (including Chairman)	$	8,000
Compensation and Management Development Committee
Compensation and Management Development Committee Chairman	$	8,000
Compensation and Management Development Committee Members (including Chairman)	$	6,000
Nominating and Governance Committee
Nominating and Governance Committee Chairman	$	6,000
Nominating and Governance Committee Members (including Chairman)	$	4,000
Annual Equity Awards (Subject to 1-Year Vesting) ²
Chairman of the Board	$	n/a-employee
Board Members (other than Chairman)	$	75,000

To be effective as of February 27, 2014. All payments will be prorated until the 2014 annual meeting of ADS’s stockholders. All non-employee directors will continue to receive reimbursement for all reasonable out-of-pocket travel and other expenses incurred in connection with attending Board meetings and Committee meetings.

Annual equity awards are payable in the form of shares of restricted stock on the date of the annual meeting of ADS’s stockholders, are valued as of the grant date, and vest in full on the 1-year anniversary of the grant date. Notwithstanding the foregoing, the initial annual equity awards are payable in the form of shares of restricted stock following the completion of the IPO, are valued as of the grant date (as determined by the Compensation and Management Development Committee), and vest in full on February 27, 2015. Non-employee directors who are affiliated with American Securities will not receive an equity award but, instead, will receive an annual fee of $150,000 in cash, along with fees for service on the various committees as described above, which fees will be paid directly to American Securities and not to the director individually.

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Exhibit 10.21

ADVANCED DRAINAGE SYSTEMS, INC.

DIRECTOR STOCK AGREEMENT

This Director Stock Agreement (this “ Agreement ”) is entered into as of , 201 , by and between Advanced Drainage Systems, Inc., a Delaware corporation (the “ Company ”), and , a director of the Company (the “ Grantee ”).

W I T N E S S E T H

WHEREAS, pursuant to the provisions of the Company’s Non-Employee Director Compensation Plan (the “ Plan ”), the Company desires to award to the Grantee restricted shares of Common Stock, $.01 par value, of the Company (“ Common Stock ”), in accordance with the provisions of the Plan, all on the terms and conditions hereinafter set forth;

WHEREAS, Grantee wishes to accept said offer; and

WHEREAS, the parties hereto understand and agree that any terms used and not defined herein shall have the same meanings as in the Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

§1. Terms of Award . The Company hereby awards to the Grantee ( ) shares of Common Stock (the “ Shares ”) in accordance with the terms of this Agreement.

§2. Provisions of Plan Controlling . The Grantee specifically understands and agrees that the Shares issued under the Plan are being awarded to the Grantee pursuant to the Plan, copies of which Plan the Grantee acknowledges he or she has read, understands and by which he or she agrees to be bound. The provisions of the Plan are incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan shall control.

§3. Vesting of Restricted Stock .

(a) General . Subject to the terms and conditions of the Plan and this Agreement, and except as provided in §§3(b), 3(c), and 3(d) of this Agreement, one hundred percent (100%) of the Shares awarded hereunder shall vest and shall no longer be subject to a risk of forfeiture on [the first anniversary of the date of the grant of the Shares] (the “Vesting Date”) provided that the Grantee has continuously served as a director from the date hereof through such Vesting Date.

(b) Death of Grantee . If the Grantee shall die prior to the Vesting Date while serving as a director, the provisions of §3(a) shall have no force and effect, and the Shares awarded hereunder shall vest and shall no longer be subject to a risk of forfeiture.

(c) Disability of Grantee . If the Grantee shall become permanently and totally disabled within the meaning of §22(e)(3) of the Code prior to the Vesting Date while serving as a director, the provisions of §3(a) shall have no force and effect, and the Shares awarded hereunder shall vest and shall no longer be subject to a risk of forfeiture.

(d) Other Termination of Service . If the Grantee ceases prior to the Vesting Date to serve as a director for any reason other than death or permanent and total disability, the Shares awarded hereunder shall be forfeited to the Company for no consideration.

§4. Dividend and Voting Rights. Grantee shall have the right to vote any Shares awarded hereunder and to receive any dividends declared with respect to such Shares, provided that such voting and dividend rights shall lapse with respect to any Shares that are forfeited to the Company pursuant to §3 of this Agreement.

§5. Additional Shares .

(a) If the Company shall pay a stock dividend or declare a stock split on or with respect to any of its Common Stock, or otherwise distribute securities of the Company to the holders of its Common Stock, the number of shares of stock or other securities of the Company issued with respect to the Shares then subject to the restrictions contained in this Agreement shall be added to the Shares subject to this Agreement. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation distributed with respect to the Shares then subject to the restrictions contained in this Agreement shall be added to the Shares subject to this Agreement.

(b) If the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall be a party to a merger, consolidation or capital reorganization, there shall be substituted for the Shares then subject to the restrictions contained in this Agreement such amount and kind of securities as are issued in such subdivision, combination, reclassification, merger, consolidation or capital reorganization in respect of the Shares subject to this Agreement.

§6. Legends . All certificates representing the Shares to be issued to the Grantee pursuant to this Agreement shall have endorsed thereon legends substantially as follows:

“The shares represented by this certificate are subject to restrictions set forth in a Director Stock Agreement dated , 201 with the Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion

of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

§7. Investment Intent . The Grantee represents and warrants to the Company that the Shares are being acquired for the Grantee’s own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares.

§8. Notices . Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:

If to the Company:

Advanced Drainage Systems, Inc.

4640 Trueman Boulevard

Hilliard, Ohio 43026

Attention: Corporate Secretary

If to the Grantee:

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one (1) business day following delivery to a recognized courier service or three (3) business days following mailing by registered or certified mail.

§9. Governing Law . This Agreement shall be construed and enforced in accordance with the laws of the State of Ohio.

§10. Benefit of Agreement . Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

§11. Entire Agreement . This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict, the express terms and provisions of this Agreement, provided, however, in any event, this Agreement shall be subject to and governed by the Plan.

§12. Modifications and Amendments . The terms and provisions of this Agreement may be modified or amended as provided in the Plan.

§13. Waivers and Consents . The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

* * * * *

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer, and the Grantee has hereunto set his or her hand, all as of the day and year first above written.


ADVANCED DRAINAGE SYSTEMS, INC.

By:
		Joseph A. Chlapaty, Chairman & Chief
		Executive Officer


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Exhibit 10.25

USA S HAREHOLDERS A GREEMENT

T IGRE -ADS USA I NC .

April 7, 2014

This USA SHAREHOLDERS AGREEMENT (this “ Agreement ”) is made and entered into as of the date first set forth above (the “ Effective Date ”), by and among Tigre-ADS USA Inc. (formerly known as Tigre USA Inc.), a corporation organized under the laws of Wisconsin, United States of America (the “ Corporation ”), ADS Ventures, Inc., a corporation organized under the laws of Delaware, United States of America (“ ADS Ventures ”), and Tigre S.A. — Tubos e Conexões, a corporation ( sociedade anônima ) organized under the laws of Brazil (“ Tigre Parent ”). In addition, Advanced Drainage Systems, Inc., a corporation organized under the laws of Delaware, United States of America (“ ADS Parent ”), joins this Agreement to undertake the specific obligations applicable to ADS Parent set forth in this Agreement. ADS Ventures and Tigre Parent are sometimes referred to herein as a “ Shareholder ,” singly and the “ Shareholders ,” collectively. ADS Ventures, Tigre Parent, the Corporation, and ADS Parent are sometimes referred to singly herein as a “ Party ” and collectively as the “ Parties .”

RECITALS

WHEREAS , ADS Ventures and Tigre Parent constitute all of the shareholders of the Corporation;

WHEREAS , as of the Effective Date, the Corporation’s articles of incorporation have been amended to provide that the Corporation is a statutory close corporation within the meaning of Sections 180.1801 to 180.1837 of the Wisconsin Statutes; and

WHEREAS , the Shareholders now desire to enter into this Agreement as contemplated in Section 180.1823 of the Wisconsin Statutes to regulate the exercise of the corporate powers and the management of the business and affairs of the Corporation and the relations among the Shareholders;

AGREEMENT

NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

DEFINITIONS

Certain capitalized words and phrases used herein and not otherwise defined have the meanings set forth or referenced on Exhibit A attached hereto.

ARTICLE I

ORGANIZATIONAL MATTERS

1.1 Statutory Close Corporation Status . The Corporation is, and shall remain, organized as a statutory close corporation under the laws of Wisconsin, United States of America.

1.2 Agreement Among Shareholders . This Agreement is adopted as of the Effective Date by all of the Shareholders and constitutes an “agreement among shareholders” as provided for in Section 180.1823 of the Wisconsin Statutes. By entering into this Agreement, the Shareholders repeal any and all prior bylaws (in accordance with Section 180.1825 of the Wisconsin Statutes) and agreements among the shareholders within the meaning of Section 180.1823 of the Wisconsin Statutes.

1.3 Corporation Name . On the Effective Date, subject to the terms and conditions of the License Agreements, the name of the Corporation shall be “Tigre-ADS USA Inc.”, and all Corporation business shall be conducted in such name or such other name or names that comply with applicable Law as the Shareholders may designate from time to time by mutual agreement.

1.4 Corporate Domicile; Principal Office . The corporate domicile of the Corporation shall be Janesville, Wisconsin, or such other place within the U.S. as both Shareholders may designate by mutual agreement. The principal office of the Corporation shall be located in Janesville, Wisconsin, or at such other location as the Shareholders may designate from time to time.

1.5 Purposes . The purpose and nature of the Corporation’s business shall be to engage (directly or through its Subsidiaries) in the Business anywhere in the world and to engage in such other activities as Entities of the same type as the Corporation may lawfully engage.

1.6 Brand Name . So long as both ADS Ventures (or one of its Affiliates) and Tigre Parent (or one of its Affiliates) are Shareholders, subject to the License Agreements, the Corporation shall (and shall cause the Subsidiaries to) market and sell all Products of the Business under the brand name “Tigre-ADS”. The rights of the Corporation or any Subsidiary to use the names “Tigre” or “ADS” shall be governed by and shall terminate in accordance with the applicable License Agreement.

ARTICLE II

MATTERS RELATING TO SHAREHOLDERS

2.1 Shareholders . The Shareholders collectively own all of the authorized and outstanding shares of common stock, without par value (the “ Shares ”), of the Corporation. The Corporation has no other authorized classes of capital stock. The Shares are issued and outstanding as set forth on Schedule I attached hereto and incorporated herein by reference, and as amended from time to time in accordance with the terms and conditions of this Agreement. As used herein, “ Shareholders ” shall also include subsequent holders of Shares that have executed and delivered a joinder document with respect to this Agreement.

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ARTICLE III

CAPITAL CONTRIBUTIONS

3.1 No Other Required Capital Contributions . Other than as authorized by the Shareholders pursuant to Section 5.1(b), no Shareholder shall be required to make any capital contributions to the Corporation.

ARTICLE IV

DIVIDENDS; DISTRIBUTIONS

4.1 Dividends.

(a) Distribution of Consolidated Net Profits . Subject to Section 5.1(b), commencing with respect to the third (3rd) full Fiscal Year after the Effective Date, with respect to each Fiscal Year in which the Corporation and/or any Subsidiary operates, on or before the one hundred twentieth (120th) Day following the end of such Fiscal Year, the Corporation shall pay a dividend (on a Pro Rata basis) equivalent to fifty percent (50%) of the Consolidated Net Profits of the Corporation for such Fiscal Year to the extent such dividend does not prevent compliance with the applicable earnings retention amounts contemplated in the annual Budget. For avoidance of doubt, (i) the payment of any dividends or other distributions in accordance with the annual Budget, this Section 4.1(a), Section 4.2 or ARTICLE X is not a Major Matter pursuant to Section 5.1(b)(xv), and (ii) except for the payment of any dividends or other distributions in accordance with the annual Budget, this Section 4.1(a), Section 4.2 or ARTICLE X, the payment of any dividends or other distributions is a Major Matter pursuant to Section 5.1(b)(xv).

(b) No Dividends if Prohibited . No provision of this ARTICLE IV shall require any dividend or other distribution of Cash to Shareholders if and to the extent such dividend or other distribution would be prohibited by applicable Law or by any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which the Corporation is a party or by which the Corporation is bound or to which the assets of the Corporation are subject.

4.2 Distributions on Dissolution and Winding Up . Upon the dissolution and winding up of the Corporation, all available proceeds distributable to the Shareholders shall be distributed to the Shareholders in accordance with ARTICLE X.

ARTICLE V

MANAGEMENT AND OPERATION OF BUSINESS

5.1 Shareholders; No Board of Directors; Officers .

(a) Powers and Authority; No Board of Directors . As contemplated in the Articles of Incorporation and in Sections 180.1821 and 180.1823 of the Wisconsin Statutes, the Corporation shall operate without a Board of Directors. All corporate powers shall be exercised by, or under authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Shareholders in accordance with this ARTICLE V, and all powers and duties

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conferred or imposed upon the Board of Directors by Chapter 180 of the Wisconsin Statutes shall be exercised and performed in accordance with this ARTICLE V.

(b) Major Matters. Notwithstanding anything to the contrary in this Agreement, the Corporation shall not take any action in connection with or relating to the following matters (“ Major Matters ” and each separately a “ Major Matter ”) without the approval of the holders of at least three-fourths (3/4) of the issued and outstanding Shares:

(i) The approval of the annual Budget and amendments to the annual Budget (including any change in the distribution of dividends set forth in the annual Budget) (pursuant to Section 5.1(f), the most recently approved Budget shall apply during any period during which approval of a Budget remains pending or is otherwise not approved);

(ii) The issuance of bonds, debentures, negotiable obligations or other similar instruments of debt, or the obtaining of any loan from any Person including loans from a Shareholder, other than (A) decisions to draw on any previously approved line of credit, (B) any of the foregoing included in the applicable Budget, (C) any of the foregoing not included in the applicable Budget which, in the aggregate, involve less than Two Hundred Fifty Thousand U.S. dollars (U.S.$ 250,000) per year and/or (D) any of the foregoing not included in the applicable Budget which, in the aggregate per year, involve less than the lesser of (x) One Million U.S. dollars (U.S.$ 1,000,000) and (y) 20% of the Corporation’s EBITDA for the previous Fiscal Year;

(iii) The issuance, reclassification, repurchase or redemption of any Shares or other securities of the Corporation, the acceptance or requirement of any capital contribution or any other adjustment to the capitalization of the Corporation;

(iv) The selection, removal or replacement of any officer of the Corporation (other than the Executive Officer, the general manager and the finance manager of the Corporation) or any executive officer of any Subsidiary;

(v) Any acquisition of securities or substantially all assets of another company or any merger, consolidation or other business combination involving the Corporation or a Subsidiary;

(vi) The establishment of any joint venture or partnership arrangement between, on the one hand, the Corporation or any of its Subsidiaries, and, on the other hand, any third party;

(vii) The approval of any transaction or series of transactions (including any lease or amendment thereto) not included in the applicable Budget between, on the one hand, the Corporation or any Subsidiary, and, on the other hand, any of the Shareholders or any of their respective Affiliates which exceeds or, upon payment of all rent or other payments thereunder would exceed, Two Hundred Fifty Thousand U.S. dollars (U.S.$ 250,000) or one (1) year;

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(viii) The creation or imposition of any lien on any of the assets of the Corporation or any Subsidiary;

(ix) The guarantee by the Corporation of any obligations of Subsidiaries or any third parties;

(x) The approval of the sale, lease, exchange, transfer or other disposition, directly or indirectly, in a single transaction or series of related transactions, of fifty percent (50%) or more of the assets of the Corporation which does not occur in the ordinary course of the business of the Corporation, regardless of whether such transfer includes the liabilities of the Corporation;

(xi) The approval of any transaction or series of related transactions which are not in the ordinary course of the business of the Corporation and which involve more than Two Hundred Fifty Thousand U.S. dollars (U.S.$ 250,000);

(xii) Any amendment of this Agreement, the Articles of Incorporation or the organizational documents of any Subsidiary;

(xiii) The conduct by the Corporation of any business other than the Business;

(xiv) The approval of the dissolution, winding up or liquidation of the Corporation or the filing by the Corporation of any petition in bankruptcy;

(xv) The payment of any dividends or other distributions other than in accordance with this Agreement;

(xvi) The commencement of an initial public offering of the Corporation;

(xvii) Any material tax election or any substantial change in tax or accounting practices;

(xviii) The modification, extension, early termination or waiver of any material right by the Corporation under any Transaction Document;

(xix) The creation of any Subsidiary or establishment of organizational documents for any Subsidiary;

(xx) Adoption of bylaws with respect to the Corporation;

(xxi) The development or addition of any product or product line to the product offerings of the Corporation or any of its Subsidiaries, except to the extent specifically authorized in the applicable Budget;

(xxii) The adoption or use of any trade names, logos or brands for the Corporation or any of its Subsidiaries;

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(xxiii) The approval of any matters for which applicable Law requires a greater than majority Shareholder approval, to the extent such matters are not otherwise included in this Section 5.1(b); and/or

(xxiv) The approval of any of the foregoing with respect to any Subsidiary.

(c) Shareholder Meetings . The Corporation shall not be required to hold any annual meeting of the Shareholders; provided, however , that an annual meeting of the Shareholders shall be held if requested by a Shareholder by written notice to the Corporation within thirty (30) days prior to the first (1st) Business Day after May 1 of each year, in which case the meeting will be held on the first (1st) Business Day after May 1 of such year. Any Shareholder(s) holding ten percent (10%) or more of the outstanding Shares may call a special meeting of the Shareholders. Such meeting shall be called by notifying the other Shareholder(s) in writing and shall be held not more than sixty (60) days after such notice and not less than ten (10) days after such notice. Any Shareholder notice of a special meeting shall set forth the purpose of the meeting. All meetings of the Shareholders shall be held at the Corporation’s Janesville, Wisconsin facility or such other place as determined by the holders of at least three-fourths (3/4) of the issued and outstanding Shares. All actions of the Shareholders shall be taken in writing. No meeting of Shareholders shall be required to effect an action of the Shareholders. An action of the Shareholders taken without a meeting shall be effective when signed by Shareholders holding at least three-fourths (3/4) of the issued and outstanding Shares.

(d) Shareholders Generally . Although the Corporation operates without a Board of Directors, no Shareholder shall owe fiduciary duties to the Corporation or other Shareholders. Each Shareholder shall be entitled to vote the interests of such Shareholder in a manner consistent with the interests of such Shareholder, including when such interests are not, or may not be, consistent with the interests of the Corporation or the Shareholders as a whole.

(e) Officers .

(i) Subject to Section 5.1(b), the Corporation shall have (A) an Executive Officer, to be elected or appointed by Tigre Parent so long as Tigre Parent remains a Shareholder and (B) such other officers as the Shareholders may from time to time elect or appoint for the Corporation to perform various and designated tasks and/or functions as the Shareholders deem appropriate. Subject to Section 5.1(b), the officers shall have such powers and authority as the Shareholders may determine.

(ii) Subject to this ARTICLE V and the authority of the Shareholders, the ordinary course business and affairs and property of the Corporation shall be managed on a day-to-day basis by the Executive Officer in a manner consistent with the Budget. The Executive Officer shall report and be responsible to the Shareholders for the activities and operations of the Corporation. Without limiting the generality of the foregoing, the Executive Officer shall:

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(A) Be the principal executive officer of the Corporation and, subject to the direction and control of the Shareholders, be in charge of the Business;

(B) Discharge all duties incident to the principal executive office of the Corporation and such other duties as may be prescribed by the Shareholders from time to time;

(D) See that the resolutions and directions of the Shareholders are carried into effect except in those instances in which that responsibility is specifically assigned to some other person by the Shareholders;

(E) Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the Corporation or a different mode of execution is expressly prescribed by the Shareholders, execute for the Corporation certificates for its authorized shares of stock, and any contracts, deeds, mortgages, bonds, or other instruments which the Shareholders have authorized;

(F) Execute such contracts and other instruments as the conduct of the Corporation’s business in the ordinary course requires, including capital investments, except that any capital investments not included in the applicable Budget which, in the aggregate with respect to a Fiscal Year, involve more than the lesser of (i) One Million U.S. dollars (U.S.$ 1,000,000) and (ii) 20% of the Corporation’s EBITDA for the previous Fiscal Year shall require approval by the holders of at least three-fourths (3/4) of the issued and outstanding Shares; provided, however, that with respect to any Fiscal Year, the Executive Officer shall be authorized without Shareholder approval to execute contracts and other instruments for capital investments not exceeding in the aggregate Two Hundred Fifty Thousand U.S. dollars (U.S.$ 250,000);

(G) Report and be responsible to the Shareholders for the activities and operations of the Corporation;

(H) Coordinate and supervise the work of the Corporation’s other officers;

(I) Employ, direct, fix the compensation of, discipline and discharge the Corporation’s non-officer personnel (with such matters reserved to the Shareholders for officer personnel);

(J) Be entitled to select, remove and replace the general manager of the Corporation (who shall report and be responsible to the Shareholders and the Executive Officer for the activities and operations of the Corporation); provided, however, that the Executive Officer shall not be entitled

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to take any such actions without the approval of the holders of at least three-fourths (3/4) of the issued and outstanding Shares;

(K) Be entitled to select, remove and replace the finance manager of the Corporation (who shall report and be responsible to the Shareholders and the Executive Officer for the activities and operations of the Corporation);

(L) Keep abreast of all material undertakings and activities of the Corporation and all material external factors affecting the corporation and ensure that processes and systems are in place to ensure that the Executive Officer and management of the Corporation are adequately informed; and

(M) Employ agents for the Corporation.

(iii) Any number of offices of the Corporation may be held by the same person. Subject to the provisions of this Agreement and the express directions of the Shareholders, each officer of the Corporation shall perform all duties and have any powers which are commonly incident to the office to which such officer has been appointed or which are delegated to such officer by the Shareholders.

(iv) Each officer shall be elected or appointed for an initial term of three (3) years and may be re-elected or re-appointed for an unlimited number of successive terms.

(v) Each officer shall hold office until a successor shall have been duly elected or appointed in accordance with this Agreement and shall have qualified or until such officer’s earlier death, resignation or removal. Any officer may resign at any time by giving written notice to the Corporation, and any such resignation shall take effect at the date of the receipt of such notice. Subject to Section 5.1(b), any officer may also be removed at any time, with or without cause, by the Shareholders.

(f) Budget . The Parties will develop and agree on a Budget to be effective for the period from the Effective Date to December 31, 2014. At least two (2) full calendar months before the end of each Fiscal Year after December 2014, the Executive Officer shall submit to the Shareholders a proposed annual operating, investment and capital expenditure budget for the following Fiscal Year setting forth in reasonable detail the anticipated revenues and expenses of the Corporation for the ensuing Fiscal Year, including revenues, fixed expenses, variable expenses and capital expenditures and proposed cash dividends (the “ Proposed Budget ”). Not less than thirty (30) Days prior to the start of the Fiscal Year, the Shareholders shall propose such changes, modifications, additions or deletions to the Proposed Budget as they deem appropriate. After making such changes, the final form of annual budget shall, prior to the start of the Fiscal Year, be adopted by the Shareholders as provided in Section 5.1(b)(i). Subject to Section 5.1(b), the officers of the Corporation shall be authorized to conduct the operations of the Corporation in accordance with the Budget then in effect. A Budget shall be in effect until the last day of the Fiscal Year covered by such Budget.

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(g) Failure to Adopt a Budget . If the Shareholders fail to adopt a Budget before the commencement of any Fiscal Year, the Budget most recently approved by the Shareholders will continue to apply until the Shareholders adopt a new Budget.

(h) Sales/Operational Synergies Employee . The Corporation shall have a non-officer employee whose principal function shall be to facilitate and promote sales synergies and operational synergies. The Executive Officer shall appoint, and may remove, promote or demote, such individual, unless and until ADS Ventures makes a good faith determination that such individual is not deriving expected synergies and delivers written notice of such determination to the Corporation and Tigre Parent. After any such determination and delivery of written notice, ADS Ventures shall have the exclusive right to appoint, remove, promote or demote individuals for such position, provided that any successor appointees shall be subject to the approval of Tigre Parent (not to be unreasonably withheld).

5.2 Deadlock Resolution . In the event the Shareholders cannot agree on a Major Matter in accordance with the requirements of Section 5.1(b) or fail, after the written request of a Shareholder, to take action on a Major Matter (each such situation being herein referred to as a “ Deadlock ”), then any Shareholder shall have the right to invoke the following procedures ( provided, however , that the following procedures may not be invoked with respect to (i) the initial Budget or (ii) any disagreement regarding the approval of any other annual Budget until twelve (12) full calendar months have elapsed since the last day of the Fiscal Year covered by the previous approved annual Budget):

(a) Request for Deadlock Resolution . Any Shareholder may, by notice to the other Shareholder, request that the Deadlock be resolved, whereupon the Shareholders shall use their best efforts to resolve such Deadlock. The Shareholders shall not make an artificial or abusive use of their rights to create a Deadlock and shall therefore exercise this right in good faith at all times.

(b) Buy/Sell Procedure . If the Deadlock shall not have been resolved within thirty (30) Days after the notice referred to in Section 5.2(a), then:

(i) Initiation of Procedure . Any Shareholder (the “ Initiating Shareholder ”) shall have the right to initiate the procedure set forth in this Section 5.2(b) by delivering to the other Shareholder (the “ Responding Shareholder ”) a notice (the “ Purchase and Sale Notice ”) designating the per-Share price at which such Initiating Shareholder would be willing to sell all, but not less than all, of its Shares or to buy all, but not less than all, of the Responding Shareholder’s Shares.

(ii) Rights of Responding Shareholder . The Responding Shareholder shall, by delivery of a notice (the “ Second Notice ”) to the Initiating Shareholder within thirty (30) Days of the receipt by the Responding Shareholder of the Purchase and Sale Notice (the “ Exercise Period ”), elect to purchase all, but not less than all, of the Shares of the Initiating Shareholder or sell all, but not less than all, of the Shares of the Responding Shareholder, at a price calculated based on the per-Share price specified in the Purchase and Sale Notice. In the event that the Responding Shareholder fails to deliver the Second Notice to the Initiating Shareholder within the thirty (30)-Day period described in this

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Section 5.2(b)(ii), then the Responding Shareholder shall be deemed to have elected to sell all of the Shares of the Responding Shareholder based on the per-Share price specified in the Purchase and Sale Notice.

(iii) Closing Pursuant to Buy/Sell Procedure Following Deadlock . The closing of the transactions described in Section 5.2(b)(ii) (the “ Deadlock Closing ”) shall occur at the location agreed by the Parties for such purposes on or before the later of (A) the thirtieth (30th) Day after the expiration of the Exercise Period or (B) the fifth (5th) Business Day after the receipt of all applicable regulatory and governmental approvals to the purchase, if any. At the Deadlock Closing, the selling Shareholder shall sell, and the purchasing Shareholder shall purchase, the selling Shareholder’s Shares in accordance with the following procedure: (1) the selling Shareholder shall execute and deliver to the purchasing Shareholder (I) the stock certificates evidencing the Shares held by the selling Shareholder, free and clear of all Liens, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto, in form and substance reasonably acceptable to the purchasing Shareholder and (II) any other instruments reasonably requested by the purchasing Shareholder to give effect to the purchase; and (2) the purchasing Shareholder shall deliver to the selling Shareholder the purchase price specified in the Purchase and Sale Notice in immediately available funds. In the event that the selling Shareholder refuses to transfer its Shares following the purchasing Shareholder’s compliance with the procedures set forth in this Section 5.2, the selling Shareholder shall be in material breach of this Agreement, and the purchasing Shareholder shall be entitled to obtain an order compelling the selling Shareholder to effect the sale of the Shares contemplated in this Section 5.2(b) pursuant to the dispute resolution procedures set forth in Section 9.1.

(iv) Sufficiency of Payment . Subject to any unpaid charges under any of the Transaction Documents and/or any other obligations or liabilities existing among the selling Shareholder, the other Shareholder and the Corporation as of the Deadlock Closing, the payment to the selling Shareholder pursuant to this Section 5.2 will be, and will be deemed to be, in complete liquidation and satisfaction of all the rights and interest of the selling Shareholder (and of all Persons claiming by, through, or under the selling Shareholder) in and in respect of the Corporation, including any rights against the Corporation and (insofar as the affairs of the Corporation are concerned) against the other Shareholder.

(v) Duty to Cooperate . The purchasing Shareholder and selling Shareholder shall cooperate with one another with respect to any purchase and sale pursuant to this Section 5.2(b) and shall act in a manner so as to effect an efficient continuation of the business and affairs of the Corporation.

5.3 Contemplated Raw Material and Product Sales to the Corporation or its Subsidiaries by Shareholders and their Affiliates . The Shareholders recognize and agree that it may be beneficial from time to time for the Corporation and/or its Subsidiaries to purchase raw materials and/or products from a Shareholder or an Affiliate of a Shareholder for the purpose of using such raw materials in the production of Products and/or re-selling those products with Products sold by the Corporation or any of its Subsidiaries. Any such sale shall be consummated

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at a price equal to the cost of the raw materials and/or products to the selling Shareholder or Affiliate plus the applicable fee set forth in the Budget for a transaction involving such raw materials or products. All such sales shall be made subject to compliance with applicable tax and legal requirements. The Budget shall set forth raw material/product quantity levels and fees (or methods for calculating fees) for contemplated raw materials and product sales pursuant to this Section 5.3. The combined costs and fees for any such transaction shall not exceed the prices for such raw materials and/or products that would be available on an arm’s length basis with an unrelated third party. Sales by any Shareholder or Affiliate of a Shareholder that are within the quantity level parameters and at the fees contemplated by the Budget shall not be subject to the advance disclosure requirements of Section 5.5. However, if Section 5.1(b) applies to any such sale, then the same shall be approved in accordance with the requirements of Section 5.1(b).

5.4 Termination of Transaction Documents . If any Shareholder or any of its Affiliates decides to terminate any of the Transaction Documents to which it is a party due to a material breach of its terms and conditions by the Corporation, such Shareholder or its Affiliate must do so in accordance with the terms and conditions of, and subject to the cure and arbitration requirements set forth in, the Transaction Document at issue; provided, however , that before any Shareholder or its Affiliate initiates termination and/or dispute resolution procedures under a Transaction Document other than this Agreement, the Shareholder who wishes to terminate (or whose Affiliate wishes to terminate) shall first provide written notice thereof to the other Shareholder and attempt in good faith to resolve the dispute by discussion, negotiation and/or consultation with the other Shareholder for a period of thirty (30) Days from the date such written notice is received by the other Shareholder. In the event that the dispute is not resolved within such thirty (30) Day period, then the Shareholder or its Affiliate seeking termination may seek to terminate the Transaction Document at issue in accordance with the terms and conditions of, and subject to the cure and arbitration requirements set forth in, the Transaction Document at issue.

5.5 Other Transactions with Shareholders and Affiliates . If any Shareholder or any Affiliate of such Shareholder proposes to enter into any contract, agreement or transaction with the Corporation or any Subsidiary that is not expressly contemplated by this Agreement or the then-current Budget, then the terms and conditions of such contract, agreement or transaction must be no less favorable to the Corporation than those that would be available on an arm’s length basis with unrelated third parties and such Shareholder shall, prior to entering into any such contract, agreement or transaction, disclose the proposed terms and conditions thereof to the other Shareholder prior to entering the same. Furthermore, if Section 5.1(b) applies to the proposed contract, agreement or transaction, then the same shall be approved in accordance with the requirements of Section 5.1(b). Notwithstanding the foregoing, the provisions of this Section 5.5 shall not apply to the execution and delivery of any of the Transaction Documents.

5.6 Specific Performance . The Shareholders agree that breach of the provisions of this ARTICLE V may cause irreparable injury to the Corporation, the Shareholders and/or their Affiliates for which monetary damages (or other remedy at law) are inadequate in view of (a) the complexities and uncertainties in measuring the actual damages that would be sustained by reason of the failure of compliance with such provisions, and (b) the uniqueness of the Business

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and the relationships among the Shareholders and their Affiliates. Accordingly, the Shareholders agree that the provisions of this ARTICLE V may be enforced by specific performance.

ARTICLE VI

DISPOSITION OF SHARES; CERTIFICATES

6.1 General Restrictions; Permitted Dispositions . No Shareholder may Dispose of or Encumber all or any portion of its Shares without the advance written consent of the other Shareholder, except as provided in this ARTICLE VI. In all events, a Shareholder may not make any Disposition of less than all of its Shares, and such Disposition may only be for Cash and only to a single transferee. The Disposition of Shares by a Shareholder to an Affiliate of the Shareholder may occur without the advance written consent of the other Shareholder (but shall nevertheless comply with the requirements of Section 6.3). Any attempted Disposition or Encumbrance of all or any portion of the Shares, other than in strict accordance with this ARTICLE VI, shall be, and is hereby declared, null and void ab initio .

6.2 [Intentionally Omitted] .

6.3 Requirements Applicable to All Dispositions and Admissions . In addition to the requirements set forth in Section 6.1, any Disposition of Shares shall also be subject to the following requirements, and such Disposition (and admission, if applicable) shall not be effective unless such requirements are complied with:

(a) Disposition Documents . The following documents must be delivered to the non-Disposing Shareholder and must be reasonably satisfactory, in form and substance, to the non-Disposing Shareholder:

(i) A copy of the documents and instruments pursuant to which the Disposition is effected.

(ii) An instrument, executed by the Disposing Shareholder and its transferee, containing the following information and agreements, to the extent they are not contained in the documents and instruments described in Section 6.3(a)(i):

(A) The notice address of the transferee;

(B) The transferee’s ratification of this Agreement and agreement to be bound by it;

(C) Representations and warranties about the transferee similar to those of the Shareholders in Sections 12.1 and 12.2; and

(D) Representations and warranties by the Disposing Shareholder and the transferee (1) that the Disposition is being made in accordance with all applicable Law, and (2) that the instruments provided in response to this Section 6.3(a)(i) and 6.3(a)(ii) are true and correct.

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(b) Payment of Expenses . The Disposing Shareholder shall promptly pay, or reimburse the Corporation for, all costs and expenses incurred by the Corporation in connection with the Disposition, on or before the tenth (10th) Day after receipt of the Corporation’s invoice for the amount due.

(c) Effective Date . Each Disposition complying with the provisions of this ARTICLE VI is effective as of the Day in which all of the requirements of this Section 6.3 have been met.

6.4 Encumbrances . No Shareholder may Encumber all or any portion of its Shares without the consent of the other Shareholder. If the other Shareholder consents to the creation by a Shareholder of an Encumbrance on its Shares, the Shareholder effecting such Encumbrance shall ensure that the applicable secured party executes and delivers to the Shareholders a signed writing by which such secured party (a) acknowledges the rights of the Shareholders under ARTICLE VI and ARTICLE VII and (b) agrees to allow the exercise of such rights prior to any foreclosure by such secured party or its assignees on the Shares subject to such Encumbrance.

6.5 Direct Ownership Interests in Subsidiaries .

(a) Restrictions Against Dispositions . No Shareholder may Dispose of any portion of its direct interests in the ownership of any Subsidiary (if any) without the advance written consent of the other Shareholder, except in connection with a Disposition of its Shares permitted by and made in accordance with this ARTICLE VI. If a Shareholder Disposes of its Shares in a Disposition permitted by and made in accordance with this ARTICLE VI, the disposing Shareholder shall also Dispose of all of its direct interests in the ownership of each Subsidiary in a manner that results in the owner of the Disposed Share also holding all of the direct interests in the ownership of each Subsidiary previously held by the Disposing Shareholder.

(b) Restrictions Against Encumbrances . No Shareholder may Encumber all or any portion of its direct interests in the ownership of any Subsidiary (if any) without the consent of the other Shareholder. If the other Shareholder consents to the creation by a Shareholder of an Encumbrance on its direct interests in the ownership of any Subsidiary, the Shareholder effecting such Encumbrance shall ensure that the applicable secured party executes and delivers to the Shareholders a signed writing by which such secured party (a) acknowledges the rights of the Shareholders under ARTICLE VI and ARTICLE VII and (b) agrees to allow the exercise of such rights prior to any foreclosure by such secured party or its assignees on the direct interests in the ownership of any Subsidiary subject to such Encumbrance.

(c) Attempted Dispositions or Encumbrances in Violation of Agreement . Any attempted Disposition or Encumbrance of all or any portion of the direct interests in the ownership of any Subsidiary held by any Shareholder (if any), other than in strict accordance with this Section 6.5, shall be, and is hereby declared, null and void ab initio .

6.6 Specific Performance . The Shareholders agree that breach of the provisions of this ARTICLE VI may cause irreparable injury to the Corporation, the Shareholders and/or their Affiliates for which monetary damages (or other remedy at law) are inadequate in view of (a) the

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complexities and uncertainties in measuring the actual damages that would be sustained by reason of the failure of compliance with such provisions, and (b) the uniqueness of the Business and the relationships among the Shareholders and their Affiliates. Accordingly, the Shareholders agree that the provisions of this ARTICLE VI may be enforced by specific performance.

6.7 Certificates of Shares; Legend . The Shareholders shall be entitled to one or more certificates signed in the name of the Corporation by the Executive Officer representing the number of Shares owned by them. In the event of the loss, theft or destruction of any certificate of stock, another certificate may be issued in its place pursuant to such regulations as the Shareholders may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity. All certificates evidencing the ownership of Shares that the Shareholder presently owns or hereafter acquires shall bear the following legend:

THE RIGHTS OF SHAREHOLDERS IN A STATUTORY CLOSE CORPORATION MAY DIFFER MATERIALLY FROM THE RIGHTS OF SHAREHOLDERS IN OTHER CORPORATIONS. COPIES OF THE ARTICLES OF INCORPORATION, THE BYLAWS, IF ANY, AND SHAREHOLDERS’ AGREEMENTS OR OTHER DOCUMENTS, WHICH MAY RESTRICT TRANSFERS AND AFFECT VOTING OR OTHER RIGHTS, MAY BE OBTAINED WITHOUT CHARGE BY A SHAREHOLDER ON WRITTEN REQUEST TO THE CORPORATION.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER (THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT OR AN EXEMPTION THEREFROM.

ARTICLE VII

TERMINATION

7.1 Termination Events . This ARTICLE VII shall apply to any of the following events (each a “ Termination Event ”):

(a) A Shareholder becomes a Bankrupt Shareholder or any Owner Party of such Shareholder becomes (if such Owner Party were a Shareholder) a Bankrupt Shareholder;

(b) The dissolution of a Shareholder or any Owner Party of such Shareholder;

(c) A Change of Control or a sale of all or substantially all of a Shareholder’s assets resulting in such assets being controlled or held, as applicable, directly or indirectly, by a Person other than an Affiliate of such Shareholder (i) who is on the other Shareholder’s Prohibited List or any Affiliate of such Person or (ii) who is engaged, directly or indirectly, in the other Shareholder’s Competing Business; and/or

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(d) An arbitrator, in accordance with the provisions of ARTICLE IX, determines that a Shareholder or any of its Affiliates has materially breached this Agreement and has failed to cure such material breach during the thirty (30)-Day period commencing on the date such Shareholder received written notice of such breach from the other Shareholder.

In each case, the Shareholder with respect to whom a Termination Event has occurred is referred to herein as the “ Affected Shareholder ”.

7.2 Effects of a Termination Event Due to Material Breach Under This Agreement .

(a) Rights of Non-Affected Shareholder . If a Termination Event of the type described in Section 7.1(d) occurs, as part of the arbitration proceeding in which the finding described in Section 7.1(d) is made, the non-Affected Shareholder shall be entitled to (i) initiate the buy/sell procedure described in Section 7.2(b) or (ii) cause the liquidation of the Corporation pursuant to the provisions of ARTICLE X.

(b) USA Material Breach Buy/Sell Procedure .

(i) Initiation of Procedure . To initiate a buy/sell procedure in connection with a Termination Event of the type described in Section 7.1(d), the non-Affected Shareholder shall deliver to the Affected Shareholder and the arbitrator of the arbitration proceeding in which the finding described in Section 7.1(d) is made a notice (the “ USA Material Breach Buy/Sell Notice ”) designating a per-Share price for all, but not less than all, of the Affected Shareholder’s Shares.

(ii) Rights of Affected Shareholder . Within thirty (30) Days of the receipt by the Affected Shareholder of the USA Material Breach Buy/Sell Notice, the Affected Shareholder shall elect, via delivery of notice to the non-Affected Shareholder and such arbitrator, to, in a transaction overseen by the arbitrator of such arbitration proceeding, either (A) sell all, but not less than all, of the Shares of the Affected Shareholder to the non-Affected Shareholder or its designee for cash in an amount equal to ninety percent (90%) of the price calculated based on the per-Share price designated in the USA Material Breach Buy/Sell Notice minus the amount of damages resulting from the Affected Shareholder’s breach of the Agreement that is the basis for the Termination Event (as determined by such arbitrator) (the “ Material Breach Arbitration Award ”) or (B) purchase all, but not less than all, of the Shares of the non-Affected Shareholder for cash in an amount equal to one hundred percent (100%) of the price calculated based on the per-Share price designated in the USA Material Breach Buy/Sell Notice plus the Material Breach Arbitration Award. In the event that the Affected Shareholder fails to so elect within the thirty (30)-Day period described in this Section 7.2(b)(ii), then the Affected Shareholder shall be deemed to have elected to sell all of the Shares of the Affected Shareholder based on the per-Share price described in Section 7.2(b)(ii)(A).

(iii) Closing of Buy/Sell Transaction . The closing of the transactions described in Section 7.2(b) shall occur at such time and pursuant to this Section 7.2(b)(iii) and such other procedures as are determined by the arbitrator of the arbitration proceeding

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in which the finding described in Section 7.1(d) is made. At such closing, the selling Shareholder shall sell, and the purchasing Shareholder shall purchase, the selling Shareholder’s Shares in accordance with the following procedure: (A) the selling Shareholder shall execute and deliver to the purchasing Shareholder (1) the stock certificates evidencing the Shares held by the selling Shareholder, free and clear of all Liens, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto, in form and substance reasonably acceptable to the purchasing Shareholder and such arbitrator, and (2) any other instruments reasonably requested by the purchasing Shareholder or such arbitrator to give effect to the purchase; and (B) the purchasing Shareholder shall deliver to the selling Shareholder the applicable purchase price in immediately available funds. In the event that the selling Shareholder refuses to transfer its Shares following the purchasing Shareholder’s compliance with the procedures set forth in this Section 7.2(b), the selling Shareholder shall be in material breach of this Agreement, and the purchasing Shareholder shall be entitled to obtain from such arbitrator an order compelling the selling Shareholder to effect the sale of the Shares contemplated in this Section 7.2(b) and to execute and deliver such other documentation required by such arbitrator.

(iv) Sufficiency of Payment . Subject to any unpaid charges under any of the Transaction Documents and/or any other obligations or liabilities existing among the selling Shareholder, the other Shareholder and the Corporation as of the closing of the transactions described in Section 7.2(b), the payment to the selling Shareholder pursuant to this Section 7.2 will be, and will be deemed to be, in complete liquidation and satisfaction of all the rights and interest of the selling Shareholder (and of all Persons claiming by, through, or under the selling Shareholder) in and in respect of the Corporation, including any rights against the Corporation and (insofar as the affairs of the Corporation are concerned) against the other Shareholder.

7.3 Effects of a Termination Event Due to Change of Control . If a Termination Event of the type described in Section 7.1(c) occurs, the non-Affected Shareholder shall be entitled to (a) in the capacity of an Initiating Shareholder, initiate the procedure set forth in Section 5.2(b) for the resolution of a Deadlock and, as applicable, purchase all, but not less than all, of the Shares of the Affected Shareholder, or sell all, but not less than all, of the Shares of the non-Affected Shareholder to the Affected Shareholder in accordance with Section 5.2(b) or (b) cause the liquidation of the Corporation pursuant to the provisions of ARTICLE X.

7.4 Procedure for Other Termination Events . If a Termination Event of the type described in Section 7.1(a) or 7.1(b) occurs, the following shall apply:

(a) Notice of Termination Event . The Affected Shareholder (or its representative) shall promptly give notice of the Termination Event to the other Shareholder and, upon learning of the Termination Event (via such notice or otherwise) the non-Affected Shareholder shall have the option to (i) acquire all of the Shares held by the Affected Shareholder or (ii) cause the liquidation of the Corporation pursuant to the provisions of ARTICLE X.

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(b) Exercise of Termination Rights . The non-Affected Shareholder may exercise such rights by notifying the Affected Shareholder (or its representative) of the exercise of such option within thirty (30) Days following the later of the occurrence of such Termination Event and the receipt by the non-Affected Shareholder of the Affected Shareholder’s notice as required by the first sentence of Section 7.4(a), (the “ Termination Option Period ”). If the non-Affected Shareholder does not respond during the Termination Option Period, the non-Affected Shareholder shall be deemed to have waived its rights pursuant to this Section 7.4.

(c) Effectuation of Termination Option . If, during the Termination Option Period, the non-Affected Shareholder (the “ Termination Buyer ”) exercises its option under Section 7.4 to acquire all of the Shares held by the Affected Shareholder, then each of the following shall apply:

(i) Price, Payment and Documentation . The Affected Shareholder shall sell, and the Termination Buyer shall purchase, the Affected Shareholder’s Shares for cash in an amount equal to the fair market value of such Shares (as determined in accordance with this Section 7.4). At the closing of such sale: (A) the Affected Shareholder shall execute and deliver to the Termination Buyer (1) the stock certificates evidencing the Shares held by the Affected Shareholder, free and clear of all Liens, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, with all required stock transfer tax stamps affixed thereto, in form and substance reasonably acceptable to the Termination Buyer, and (2) any other instruments reasonably requested by the Termination Buyer to give effect to the purchase; and (B) the Termination Buyer shall deliver to the Affected Shareholder the purchase price specified in this Section 7.4 in immediately available funds. In the event that the Affected Shareholder refuses to transfer its Shares following the Termination Buyer’s compliance with the procedures set forth in this Section 7.4, the Affected Shareholder shall be in material breach of this Agreement, and the Termination Buyer shall be entitled to obtain an order compelling the Affected Shareholder to effect the sale of the Shares contemplated in this Section 7.4 pursuant to the dispute resolution procedures set forth in Section 9.1.

(ii) Termination Option Closing Date and Location . The date for the sale transaction described in Section 7.4 shall be selected by the Termination Buyer but shall occur on or before the later of (A) if no Formal Termination Valuation is utilized, forty-five (45) Days, or if a Formal Termination Valuation is utilized, ninety (90) Days, after the end of the Termination Option Period or (B) the fifth (5th) Business Day after the receipt of all applicable regulatory and governmental approvals to such sale transaction, if any.

(iii) Sufficiency of Payment . Subject to any unpaid charges under any of the Transaction Documents and/or any other obligations or liabilities existing among the selling Shareholder, the other Shareholder and the Corporation as of the closing of the sale transaction described in Section 7.4, the payment to the Affected Shareholder pursuant to this Section 7.4 will be, and will be deemed to be, in complete liquidation and satisfaction of all the rights and interest of the Affected Shareholder (and of all Persons claiming by, through, or under the Affected Shareholder) in and in respect of the Corporation, including

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any rights against the Corporation and (insofar as the affairs of the Corporation are concerned) against the other Shareholder.

(iv) Determination of Fair Market Value . The fair market value of the Shares of the Affected Shareholder to be sold pursuant to this Section 7.4 shall be determined, if possible, by the mutual agreement of the Termination Buyer and the Affected Shareholder. If the Termination Buyer and the Affected Shareholder do not reach such agreement as to fair market value of such interests on or before the thirtieth (30th) Day following the end of the Termination Option Period, either of them, by notice to the other, may require the determination of fair market value to be made by the Valuation Specialist (such determination by the Valuation Specialist, the “ Formal Termination Valuation ”).

ARTICLE VIII

NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY

8.1 Noncompetition . Except as expressly set forth in this ARTICLE VIII, this Agreement shall not restrict in any way the right and ability of the Shareholders or Affiliates of the Shareholders at any time and from time to time to engage in and possess interests in other business ventures of any and every type and description, independently or with others. For avoidance of doubt, the provisions of this Section 8.1, including Section 8.1(a) and Section 8.1(b), shall be subject to the final paragraph of this Section 8.1.

(a) Restriction on Shareholders and Exiting Shareholders regarding Products .

(i) While a Shareholder . Unless expressly authorized by the advance written consent of the other Shareholder, no Shareholder shall (and each Shareholder shall cause its Affiliates not to) engage, directly or indirectly (other than via the Corporation and the Corporation’s Subsidiaries), in the manufacture, marketing, selling or servicing of Products in any part of the U.S. or Canada.

(ii) After Shareholder Exits Corporation . If a Shareholder (the “ Exiting Shareholder ”) Disposes of its Shares to a non-Affiliate of the Exiting Shareholder pursuant to Section 5.2, 6.1, 7.2, 7.3 or 7.4 or the Corporation is liquidated pursuant to Section 7.2, 7.3 or 7.4 due to the occurrence of a Termination Event with respect to the Exiting Shareholder or any Owner Party of the Exiting Shareholder, then, for the two (2) year period after the date of such Disposition or liquidation, unless expressly authorized by the advance written consent of the Corporation (or, in the event of such a liquidation, the consent of the non-Affected Shareholder), the Exiting Shareholder shall not (and the Exiting Shareholder shall cause its Affiliates not to) engage, directly or indirectly, in the manufacture, marketing, selling or servicing in any part of the U.S. or Canada of any Products that were included in the product line(s) of the Corporation or any of its Subsidiaries immediately prior to the date of such Disposition or liquidation.

(b) Additional Restrictions on Parent Companies of Shareholders .

(i) ADS Parent Restrictions While Affiliate is a Shareholder . So long as ADS Parent or any Affiliate of ADS Parent remains a Shareholder, unless expressly

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authorized by the advance written consent of the other Shareholder, ADS Parent shall not (and ADS Parent shall cause its Affiliates not to) engage, directly or indirectly (other than via the Corporation and the Corporation’s Subsidiaries), in the manufacture, marketing, selling or servicing of Products in any part of the U.S. or Canada.

(ii) ADS Parent Restrictions After Affiliate Exits Corporation . If any Affiliate of ADS Parent that is a Shareholder (including ADS Parent if it is the Shareholder) (the “ ADS Shareholder ”) Disposes of its Shares to a non-Affiliate of ADS Parent pursuant to Section 5.2, 6.1, 7.2, 7.3 or 7.4 or the Corporation is liquidated pursuant to Section 7.2, 7.3 or 7.4 due to the occurrence of a Termination Event with respect to the ADS Shareholder or any Owner Party of the ADS Shareholder, then, for the two (2) year period after the date of such Disposition or liquidation, unless expressly authorized by the advance written consent of the Corporation (or, in the event of such a liquidation, the consent of the non-Affected Shareholder), ADS Parent shall not (and ADS Parent shall cause its Affiliates not to) engage, directly or indirectly, in the manufacture, marketing, selling or servicing in any part of the U.S. or Canada of any Products that were included in the product line(s) of the Corporation or any of its Subsidiaries immediately prior to the date of such Disposition or liquidation.

(iii) Tigre Parent Restrictions While Affiliate is a Shareholder . So long as Tigre Parent or any Affiliate of Tigre Parent remains a Shareholder, unless expressly authorized by the advance written consent of the other Shareholder, Tigre Parent shall not (and Tigre Parent shall cause its Affiliates not to) engage, directly or indirectly (other than via the Corporation and the Corporation’s Subsidiaries), in the manufacture, marketing, selling or servicing of Products in any part of the U.S. or Canada.

(iv) Tigre Parent Restrictions After Affiliate Exits Corporation . If any Affiliate of Tigre Parent that is a Shareholder (including Tigre Parent if it is the Shareholder) (the “ Tigre Shareholder ”) Disposes of its Shares to a non-Affiliate of Tigre Parent pursuant to Section 5.2, 6.1, 7.2, 7.3 or 7.4 or the Corporation is liquidated pursuant to Section 7.2, 7.3 or 7.4 due to the occurrence of a Termination Event with respect to the Tigre Shareholder or any Owner Party of the Tigre Shareholder, then, for the two (2) year period after the date of such Disposition or liquidation, unless expressly authorized by the advance written consent of the Corporation (or, in the event of such a liquidation, the consent of the non-Affected Shareholder), Tigre Parent shall not (and Tigre Parent shall cause its Affiliates not to) engage, directly or indirectly, in the manufacture, marketing, selling or servicing in any part of the U.S. or Canada of any Products that were included in the product line(s) of the Corporation or any of its Subsidiaries immediately prior to the date of such Disposition or liquidation.

Notwithstanding anything to the contrary in this Agreement, this Section 8.1 does not and shall not restrict in any way the manufacture, marketing, selling or servicing (i) by ADS Parent and/or its Affiliates of (A) any product offered for sale by ADS Parent or any of its Affiliates on or before the Effective Date, (B) (I) products of the type or similar to products supplied by the Nyloplast product line of ADS Parent and/or its Affiliates or (II) any now existing or future developed structures, in-line drains, heavy-duty road and highway structures or curb inlet structures and related products for underground drainage systems, (C) products of the type or

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similar to products supplied by the Inserta Tee product line of ADS Parent and/or its Affiliates or (D) any other products (other than Products in the U.S. or Canada), including fittings used in connection with corrugated polyethylene and polypropylene pipe products or (ii) by Tigre Parent and/or its Affiliates of (A) any product offered for sale or, to the extent listed on Exhibit C attached hereto, under development by Tigre Parent or any of its Affiliates on or before the Effective Date (other than Products in the U.S. or Canada) or (B) any other products (other than Products in the U.S. or Canada).

8.2 Nonsolicitation .

(a) While a Shareholder . Unless expressly authorized by the advance written consent of the employer of the employee at issue, each Shareholder and each of ADS Parent and Tigre Parent shall not (and each shall cause its respective Affiliates not to), directly or indirectly, during the period in which it or any of its Affiliates is a Shareholder: (i) induce or attempt to induce any employee of the Corporation, any Subsidiary, the other Shareholder or any of the Affiliates of the other Shareholder to leave the employ of the Corporation, any Subsidiary, the other Shareholder or any of the Affiliates of the other Shareholder (as applicable); (ii) in any way interfere with the relationship between the Corporation, any Subsidiary, the other Shareholder or any of the Affiliates of the other Shareholder and any employee of the Corporation, any Subsidiary, the other Shareholder or any of the Affiliates of the other Shareholder (as applicable); or (iii) employ or otherwise engage as an employee, independent contractor or otherwise any employee of the Corporation, any Subsidiary, the other Shareholder or any of the Affiliates of the other Shareholder.

(b) After Shareholder Exits Corporation . Unless expressly authorized by the advance written consent of the employer of the employee at issue:

(i) Exiting Shareholders Generally . If a Shareholder Disposes of its Shares to a non-Affiliate of such Shareholder pursuant to Section 5.2, 6.1, 7.2, 7.3 or 7.4 or the Corporation is liquidated pursuant to Section 7.2, 7.3 or 7.4 due to the occurrence of a Termination Event with respect to such Shareholder or any Owner Party of such Shareholder, then such Shareholder shall continue to comply with Section 8.2(a) for the two (2) year period after the date of such Disposition or liquidation.

(ii) Exiting ADS Shareholders . If an ADS Shareholder Disposes of its Shares to a non-Affiliate of ADS Parent pursuant to Section 5.2, 6.1, 7.2, 7.3 or 7.4 or the Corporation is liquidated pursuant to Section 7.2, 7.3 or 7.4 due to the occurrence of a Termination Event with respect to the ADS Shareholder or any Owner Party of the ADS Shareholder, then ADS Parent shall continue to comply with Section 8.2(a) for the two (2) year period after the date of such Disposition or liquidation.

(iii) Exiting Tigre Shareholders . If a Tigre Shareholder Disposes of its Shares to a non-Affiliate of Tigre Parent pursuant to Section 5.2, 6.1, 7.2, 7.3 or 7.4 or the Corporation is liquidated pursuant to Section 7.2, 7.3 or 7.4 due to the occurrence of a Termination Event with respect to the Tigre Shareholder or any Owner Party of the Tigre Shareholder, then Tigre Parent shall continue to comply with Section 8.2(a) for the two (2) year period after the date of such Disposition or liquidation.

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8.3 Confidentiality.

(a) Duty of Confidentiality with respect to Shareholder Confidential Information . Each Shareholder shall (and shall cause its Affiliates to), the Corporation shall (and shall cause its Affiliates to), and each of ADS Parent and Tigre Parent shall (and shall cause its Affiliates to):

(i) Use any Confidential Information of a Shareholder (in such Shareholder’s capacity as the discloser of its Confidential Information, the “ Disclosing Shareholder ”) only with regard to the Business of the Corporation and its Subsidiaries and not for any other purpose during the period when the Disclosing Shareholder or any of its Affiliates is a Shareholder; and

(ii) Hold such Confidential Information in strict confidence and not disclose the same to any third party without the prior written consent of the Disclosing Shareholder.

(b) Duty of Confidentiality with respect to Corporation and Subsidiary Confidential Information . Each Shareholder shall (and shall cause its Affiliates to) and each of ADS Parent and Tigre Parent shall (and shall cause their respective Affiliates to):

(i) Use any Confidential Information of the Corporation or any Subsidiary only with regard to the Business of the Corporation and its Subsidiaries and not for any other purpose during the period (A) with respect to any Shareholder, when such Shareholder or any of its Affiliates is a Shareholder, (B) with respect to ADS Parent, when ADS Parent or any of its Affiliates is a Shareholder and (C) with respect to Tigre Parent, when Tigre Parent or any of its Affiliates is a Shareholder; and

(ii) Hold such Confidential Information in strict confidence and not disclose the same to any third party without the prior written consent of the Corporation.

(i) Shareholder Confidential Information . With respect to Confidential Information of a Disclosing Shareholder, the use and confidentiality restrictions set forth in Section 8.3(a) shall apply to the other Shareholder, the Corporation, ADS Parent and Tigre Parent (as applicable) only until the conclusion of the two (2) year period following the date on which either (A) none of such other Shareholder or its Affiliates is a Shareholder or (B) none of the Disclosing Shareholder or its Affiliates is a Shareholder.

(ii) Corporation or Subsidiary Confidential Information . With respect to Confidential Information of the Corporation or a Subsidiary, the use and confidentiality restrictions set forth in Section 8.3(b) shall apply to the other Shareholder, ADS Parent and Tigre Parent only until the conclusion of the two (2) year period following the date on which either of the Shareholders ceases to be a Shareholder and none of the Affiliates of such Shareholder is a Shareholder.

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(d) Permitted Disclosures . Notwithstanding the foregoing, a Receiving Person shall be permitted to make disclosures of Confidential Information of a Disclosing Shareholder, the Corporation or a Subsidiary of the Corporation:

(i) Required by Law;

(ii) To a lender of or investor to the Receiving Person, provided that such lender or investor has agreed in writing to be bound by use and confidentiality restrictions at least as restrictive as those applicable to the Receiving Person, as the same are set forth in this Section 8.3, with respect to such Confidential Information;

(iii) To directors, officers, employees or representatives of such Receiving Person or an Affiliate of such Receiving Person; provided, however, that any such Person must (A) be informed of the obligations set forth in this Section 8.3 and (B) agree to abide by use and confidentiality restrictions at least as restrictive as those applicable to the Receiving Person, as the same are set forth in this Section 8.3, with respect to such Confidential Information; or

(iv) If and to the extent deemed appropriate by any Receiving Person, in its sole discretion, to any federal, state, local or foreign government (or any agency thereof).

(e) Disclosures to Related Persons . Each Receiving Person shall take appropriate steps to cause any recipients of Confidential Information of a Disclosing Shareholder, the Corporation or a Subsidiary of the Corporation permitted under the foregoing Section 8.3(d)(iii) (collectively, “ Related Persons ”) to comply with the same confidentiality obligations and use restrictions as are applicable to the Receiving Person with respect to such Confidential Information under this Section 8.3 and agrees to enforce the terms of this Section 8.3 as to its Related Persons, and to be responsible for any failure of its Related Persons to abide by the terms of this Section 8.3, as if such Related Person were the Receiving Person under this Section.

(f) Disclosures in Judicial or Governmental Proceedings . If a Receiving Person is subject to judicial or governmental proceedings requiring disclosure of particular Confidential Information of a Disclosing Shareholder, the Corporation or a Subsidiary of the Corporation, then, prior to any such disclosure, the Receiving Person shall provide such Disclosing Shareholder, the Corporation or such Subsidiary of the Corporation, as the case may be, with reasonable prior notice thereof and exercise its best efforts to cooperate with and permit such Disclosing Shareholder, the Corporation or such Subsidiary of the Corporation, as the case may be, to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the Confidential Information of such Disclosing Shareholder, the Corporation or such Subsidiary of the Corporation, as the case may be, as such Disclosing Shareholder, the Corporation or such Subsidiary of the Corporation, as the case may be, may so designate.

8.4 Remedial Provisions . The Shareholders, the Corporation, ADS Parent and Tigre Parent acknowledge and agree that all of the restrictions in this ARTICLE VIII are reasonable in all respects, including duration, geographical limitation and scope of activity restricted. The

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Shareholders, the Corporation, ADS Parent and Tigre Parent further agree that each of the covenants contained in this ARTICLE VIII shall be construed as separate agreements independent of any other provision of this Agreement or of any other agreement between such Persons or any other Person. Each of the Shareholders, the Corporation, ADS Parent and Tigre Parent acknowledges and agrees that an actual or threatened breach of the provisions of this ARTICLE VIII by it shall cause irreparable harm to the others, which harm cannot be fully redressed by the payment of damages. Accordingly, each of the non-breaching Parties shall be entitled, in addition to any other right or remedy it may have at law or in equity, to an injunction enjoining or restraining any breach or threatened breach of the provisions of this ARTICLE VIII. Moreover, in the event of a breach of any covenant of this ARTICLE VIII, the term of such covenant will be extended by the period of the duration of such breach.

ARTICLE IX

ARBITRATION

9.1 Submission of Disputes to Arbitration . Except to the extent provided in Section 5.2, any dispute, deadlock, controversy or claim arising out of or relating to this Agreement (a “ Dispute ”), including disputes and controversies and claims with respect to the validity or effect of this ARTICLE IX, that is not resolved in a manner satisfactory to the Shareholders within thirty (30) Days after any Shareholder gives the other Shareholder formal written notice that a Dispute exists, is to be resolved exclusively and finally by arbitration conducted in accordance with this Section 9.1. No arbitration procedures under this Section 9.1 shall prevent the resolution of Deadlocks as provided in Section 5.2.

(a) Joinder with Existing Arbitrations . Given the various agreements between and among the Shareholders, Affiliates of the Shareholders (including ADS Parent and its Affiliates), the Corporation and current and future Subsidiaries relating to the Business that may be in effect at any given point in time (“ Related Agreements ”), it is hereby agreed that the manner of conduct and procedures for any arbitration of any Dispute shall be joined to, consolidated with, coordinated with, and mirror to the extent possible any then-pending arbitration of related matters conducted pursuant to any Related Agreement referenced in this Agreement (including Transaction Documents) or approval of which was a Major Matter (any such arbitration, an “ Existing Arbitration ”) and the arbitrator(s) of such Existing Arbitration shall also serve as the arbitrator(s) of such Dispute. In the event that there is no Existing Arbitration at the time of a Dispute, the provisions of Section 9.1(b) shall apply to the arbitration of the Dispute. Additionally, in any event, the applicable provisions of Section 9.1(b) governing allocation of fees and expenses related to the Dispute shall apply to the arbitration of the Dispute.

(b) Arbitration Procedures . The arbitration shall be conducted under and in accordance with the Rules of Arbitration of the International Chamber of Commerce (the “ ICC Rules ”) by one arbitrator fluent in English appointed in accordance with the ICC Rules. The arbitrator shall issue its award in accordance with Wisconsin Law, but follow the ICC Rules in all respects. The arbitrator shall be (1) a U.S. lawyer and (2) experienced in arbitrating international commercial disputes. The arbitration shall take place in Chicago, Illinois. Except to the extent that any of the following shall cause a conflict with the preceding sentence, the following shall apply to the arbitration:

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(i) The arbitration shall be conducted in English and in any other language that a party to the arbitration may request; provided, however , that the expense of conducting the arbitration in such additional language shall be borne solely by the party requesting the same;

(ii) The decision of the arbitrator shall be rendered as expeditiously as possible within the six (6)-month term contemplated by the ICC Rules; provided, however, that any arbitrator is hereby authorized to extend the duration of the arbitration beyond such six (6)-month term for cause without the prior consent of the parties to the arbitration;

(iii) The award of the arbitrator shall be final and binding, and shall not be subject to further judicial review (the award shall be in writing in English);

(iv) The arbitrator shall neither have nor exercise any power to award special, exemplary, indirect, consequential, punitive or similar damages;

(v) The arbitrator’s decisions may be enforced in any court of competent jurisdiction in Brazil and/or the U.S. and any other jurisdiction in which a party involved in the Dispute is organized, and any such court is hereby authorized to enter judgment on the arbitrator’s decisions;

(vi) The parties to the arbitration shall pay on an equal share basis the fees and expenses of the arbitration proceeding, including fees and expenses of the arbitrators and International Chamber of Commerce; and

(vii) Each party to the arbitration shall carry out without delay the provisions of any arbitration award or decision.

9.2 Exclusive Dispute Resolution Method . Except to the extent provided in Section 5.2, arbitration under this ARTICLE IX is the exclusive method for resolving any Dispute and no party to this Agreement will commence any action or proceeding based on any Dispute, except to enforce an arbitrator’s decision as provided in this ARTICLE IX or to compel the other Persons to participate in arbitration under this ARTICLE IX.

ARTICLE X

DISSOLUTION AND WINDING UP

10.1 Dissolution . The Corporation shall dissolve and its affairs shall be wound up on the first to occur of the following events (each a “ Dissolution Event ”):

(a) The unanimous consent of the Shareholders; and/or

(b) The occurrence of any Termination Event with respect to which the non-Affected Shareholder exercises during the Termination Option Period its option to cause the liquidation of the Corporation.

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10.2 Winding Up . On the occurrence of a Dissolution Event, the non-Affected Shareholder shall select one or more representatives to act as a liquidator of the Corporation. The liquidator shall proceed diligently to wind up the affairs of the Corporation and its Subsidiaries and make final distributions as provided in this Agreement, the Articles of Incorporation, the Wisconsin Business Corporation Law and the Code. The costs of winding up shall be borne as a Corporation expense. Until final distribution, the liquidator shall continue to operate the Corporation properties with all of the power and authority of the Shareholders. The steps to be accomplished by the liquidator are as follows:

(a) As promptly as possible after dissolution and again after final winding up, the liquidator shall cause a proper accounting to be made by any of the top five (5) leading accounting firms of internationally recognized standards having offices in Chicago, Illinois of the Corporation’s assets, liabilities, and operations through the last calendar day of the month in which the dissolution occurs or the final winding up is completed, as applicable;

(b) Pursuant to the terms of the License Agreements, the Corporation and each Subsidiary shall (i) cease using any and all Intellectual Property of any Shareholder or its Affiliates (including Intellectual Property licensed to it pursuant to any License Agreement) and (ii) change their names to eliminate any direct or indirect reference to “Tigre,” “ADS” or “Advanced Drainage Systems”;

(c) The liquidator shall pay, satisfy or discharge from Corporation funds all of the debts, liabilities and obligations of the Corporation or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidator may reasonably determine); and

(d) All remaining assets of the Corporation shall be distributed to the Shareholders on a Pro Rata basis, except that any Intellectual Property of the Corporation or any Subsidiary shall be distributed jointly to the Shareholders such that both Shareholders receive all of the same rights with respect to such Intellectual Property and do not require the other’s consent to use such Intellectual Property.

10.3 Provisions Which Survive Disposition or Termination . The Disposition by a Shareholder of its Shares, the termination of this Agreement or the dissolution or winding up of the Corporation shall be without prejudice to any rights or liabilities of any Shareholder which have accrued prior to such cancellation or termination and shall not affect any provisions of this Agreement that are expressly or by necessary implication intended to survive such Disposition or termination. Without limiting the generality of the foregoing, the provisions of Section 4.2 and 6.3 and ARTICLE VIII, ARTICLE IX, ARTICLE X, ARTICLE XII, and ARTICLE XIII, and any other provisions of this Agreement necessary to give efficacy thereto shall continue in full force and effect following such Disposition, termination, dissolution or winding up.

ARTICLE XI

BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

11.1 Maintenance of Books . The Corporation shall keep or cause to be kept at the principal office of the Corporation complete and accurate books and records of the Corporation,

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supporting documentation of the transactions with respect to the conduct of the Corporation’s business and minutes of the proceedings of its Shareholders. The records shall include, but not be limited to, complete and accurate information regarding the state of the business and financial condition of the Corporation; a copy of this Agreement and all amendments thereto; a current list of the names and last known business, residence, or mailing addresses of all Shareholders; and the Tax Returns of the Corporation and its Subsidiaries as required by any applicable Law.

11.2 Accounts and Records . The Corporation will cause its accounts, records and accounting information to be:

(a) Maintained in accordance with all applicable Laws, IFRS and GAAP; and

(b) Audited annually by the Corporation’s auditor.

11.3 Access to Records . Each Shareholder is entitled to any and all information regarding the Corporation and its Subsidiaries. Subject to the requirements of confidentiality set forth in Section 8.3, each Shareholder may inspect the books, accounts and records of the Corporation, provided that such Shareholder provides reasonable advance notice to the Corporation and to the other Shareholder prior to any such inspection.

11.4 Financial Reporting . Subject to the terms of Section 8.3 of this Agreement, the Corporation and the Executive Officer must provide the Shareholders with sufficient management and financial information and reports to allow the Shareholders to monitor the conduct of the Business, including:

(a) The financial reports and information listed in Schedule II at the times specified in Schedule II ; and

(b) Any other reports or statements that the Shareholders may reasonably require.

ARTICLE XII

REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS;

INDEMNIFICATION

12.1 General Representations and Warranties of ADS Ventures and ADS Parent . Each of ADS Ventures and ADS Parent hereby represents and warrants to Tigre Parent as follows:

(a) Corporate Existence and Power . Each of ADS Ventures and ADS Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, U.S. Each of ADS Ventures and ADS Parent has all requisite power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder, and no consent or approval of any other Person or governmental authority is required therefor that has not been obtained, except for consents or approvals where the failure to obtain such consent or approval would not have a material adverse effect. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly authorized by all necessary action of each of ADS Ventures and ADS Parent. This Agreement is a valid and

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binding obligation of each of ADS Ventures and ADS Parent and is enforceable against each of ADS Ventures and ADS Parent in accordance with its terms and conditions, except as the enforceability thereof may be limited by bankruptcy, insolvency or other applicable Laws affecting the enforcement of creditors’ rights generally.

(b) Non-contravention . The execution and delivery of this Agreement and the consummation by each of ADS Ventures and ADS Parent of the transactions contemplated hereby do not, and with the giving of notice or lapse of time will not, violate, constitute a default under any Law or cause the termination of (a) the certificate of incorporation, charter or bylaws, as applicable, of ADS Ventures or ADS Parent or (b) any agreement, mortgage, license, permit or other instrument or obligation to which ADS Ventures or ADS Parent is bound.

12.2 General Representations and Warranties of Tigre Parent . Tigre Parent hereby represents and warrants to ADS Ventures and ADS Parent as follows:

(a) Corporate Existence and Power . Tigre Parent is a corporation (sociedade anônima) duly organized, validly existing and in good standing under the laws of Brazil. Tigre Parent has all requisite power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder, and no consent or approval of any other Person or governmental authority is required therefor that has not been obtained, except for consents or approvals where the failure to obtain such consent or approval would not have a material adverse effect. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly authorized by all necessary action of Tigre Parent. This Agreement is a valid and binding obligation of Tigre Parent and is enforceable against Tigre Parent in accordance with its terms and conditions, except as the enforceability thereof may be limited by bankruptcy, insolvency or other applicable Laws affecting the enforcement of creditors’ rights generally.

(b) Non-contravention . The execution and delivery of this Agreement and the consummation by Tigre Parent of the transactions contemplated hereby do not, and with the giving of notice or lapse of time will not, violate, constitute a default under any Law or cause the termination of (a) the articles of incorporation, charter or bylaws, as applicable, of Tigre Parent or (b) any agreement, mortgage, license, permit or other instrument or obligation to which Tigre Parent is bound.

12.3 Legal Compliance . As majority Shareholder and having power to appoint the Executive Officer, Tigre Parent covenants that it shall (and shall cause its Affiliates and the Executive Officer to), cause the Business and all transactions and activities of the Corporation or on behalf of the Corporation to comply in all material respects with all applicable Laws.

12.4 Covenants Regarding Release from Guaranties . Upon the Disposition of a Shareholder’s Shares in accordance with the terms of this Agreement, the Corporation and the remaining Shareholder(s) shall use their best efforts in securing the release, prior to the closing of the transactions pursuant to which such Shareholder is Disposing of its Shares, of such Shareholder and its Affiliates from any Corporation debts that such Shareholder and its Affiliates have guaranteed on behalf and for the benefit of the Corporation and/or any Subsidiary (the “ Guaranteed Debts ”). In the event that the release of all of the Guaranteed Debts has not been

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secured prior to the closing of the transactions pursuant to which such Shareholder is Disposing of its Shares, the Corporation and the remaining Shareholder(s) shall indemnify the Shareholder Disposing of its Shares and/or its Affiliates for any loss, damage, or expense (including reasonable attorneys’ fees and other out-of-pocket expenses) resulting from any Guaranteed Debts for which such Shareholder and/or its Affiliates remain liable as of such date.

12.5 Indemnification by the Shareholders . To the fullest extent permitted by applicable Law, each Shareholder shall indemnify the other Shareholder, its Affiliates and the directors, officers, stockholders, managers, members, employees, agents, heirs, successors, and assigns of such other Shareholder and its Affiliates (the “ Other Party Indemnitees ”) and the Corporation, its Subsidiaries, its Affiliates and the directors, officers, stockholders, managers, members, employees, agents, heirs, successors, and assigns of the Corporation, its Subsidiaries and its Affiliates (the “ Corporation Indemnitees ”) and hold such Other Party Indemnitees and Corporation Indemnitees harmless from and against all losses, costs, liabilities, damages, and expenses (including costs of suit and attorneys fees) they may incur on account of any breach by the indemnifying Shareholder of any of its representations, warranties or covenants contained in ARTICLE XII. In support of the indemnification obligations of the Shareholders set forth in this Section 12.5, ADS Parent and Tigre Parent hereby agree as set forth below.

(a) ADS Parent Indemnification . To the fullest extent permitted by applicable Law, ADS Parent shall indemnify Tigre Parent, its Affiliates and the directors, officers, stockholders, managers, members, employees, agents, heirs, successors, and assigns of Tigre Parent and its Affiliates (the “ Tigre Indemnitees ”) and the Corporation Indemnitees and hold such Tigre Indemnitees and Corporation Indemnitees harmless from and against all losses, costs, liabilities, damages, and expenses (including costs of suit and attorneys fees) they may incur on account of any breach by ADS Parent or any ADS Shareholder of any of its representations, warranties or covenants contained in ARTICLE XII.

(b) Tigre Parent Indemnification . To the fullest extent permitted by applicable Law, Tigre Parent shall indemnify ADS Parent, its Affiliates and the directors, officers, stockholders, managers, members, employees, agents, heirs, successors, and assigns of ADS Parent and its Affiliates (the “ ADS Indemnitees ”) and the Corporation Indemnitees and hold such ADS Indemnitees and Corporation Indemnitees harmless from and against all losses, costs, liabilities, damages, and expenses (including costs of suit and attorneys fees) they may incur on account of any breach by Tigre Parent or any Tigre Shareholder of any of its representations, warranties or covenants contained in ARTICLE XII.

(c) Any amounts paid by ADS Parent pursuant to Section 12.5(a) to an indemnitee for an alleged or actual breach of a covenant shall reduce any amounts to be paid by any ADS Shareholder pursuant to Section 12.5 to the same indemnitee based on the same alleged breach of covenant. Likewise, any amounts paid by Tigre Parent pursuant to Section 12.5(b) to an indemnitee for an alleged or actual breach of a covenant shall reduce any amounts to be paid by any Tigre Shareholder pursuant to Section 12.5 to the same indemnitee based on the same alleged breach of covenant.

12.6 Information Technology Services . So long as Tigre Parent or any Affiliate of Tigre Parent remains a Shareholder, and for twelve (12) months thereafter, Tigre Parent shall

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(and Tigre Parent shall cause its Affiliates to) continue to provide to the Corporation information technology services equivalent to those that it provided to the Corporation prior to the Effective Date, including use of the enterprise resource planning (ERP) system.

ARTICLE XIII

GENERAL PROVISIONS

13.1 Notices . All notices, requests or consents provided for or permitted to be given under this Agreement must be in writing in the English language and must be delivered to the recipient in person or by internationally recognized overnight courier (except that notices of Shareholder meetings may be sent to Shareholders via electronic mail transmission to executive officers of the Shareholder designated by such Shareholder from time to time); and any notice, request or consent given under this Agreement shall be effective upon receipt. All notices, requests and consents to be sent to a Shareholder must be sent to or made at the addresses given for that Shareholder on Schedule I , or such other address as that Shareholder may specify by notice to the other Shareholder pursuant to this Section 13.1, including copies to:

If for Tigre Parent:

Advocacia Portugal Gouvêa

Rua Pedroso Alvarenga, 1221, cj 8A, Itaim Bibi

São Paulo, SP

Brazil, 04531-012

Facsimile: +55(11)3071-3061

E-mail: william@portugalgouvea.com.br

Attention: William Filgueiras

If for ADS Ventures:

Squire Sanders (US) LLP

41 S. High St., Suite 2000

Columbus, Ohio 43215

Facsimile: 614.365.2499

E-mail: fredric.smith@squiresanders.com

Attention: Fredric L. Smith, Esq.

Any notice, request or consent to the Corporation must be given to all of the Shareholders. Whenever any notice is required to be given by Law or this Agreement, a written waiver thereof, signed by the Person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

13.2 Entire Agreement . This Agreement, together with the Transaction Documents, including the Exhibits, Schedules and Disclosure Schedules attached hereto or thereto, constitutes the entire agreement regarding the subject matter thereof and supersede all prior contracts or agreements with respect to such matters, whether oral or written. The Confidentiality Agreement is hereby superseded in its entirety by this Agreement. Upon their execution and delivery, each of the Transaction Documents will be an integral part of the relationship between the Shareholders contemplated by this Agreement.

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13.3 Effect of Waiver or Consent . A waiver or consent, express or implied, to or of any breach or default by any Person in the performance by that Person of its obligations with respect to the Corporation or this Agreement is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person with respect to the Corporation or this Agreement. Failure on the part of a Person to complain of any act of any Person or to declare any Person in default with respect to the Corporation or this Agreement, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that default until the applicable statute of limitations period has run.

13.4 Amendments . This Agreement may be amended only by a written instrument executed by all of the Shareholders.

13.5 Binding Effect; No Third-Party Beneficiaries; Remedies Not Exclusive . This Agreement is binding on and inures to the benefit of each Shareholder and its respective heirs, legal representatives, successors, and assigns. This Agreement is solely for the benefit of the Shareholders, their Affiliates, the Indemnitees and their respective successors and permitted assigns, and this Agreement shall not otherwise be deemed to confer upon or give to any other third party any remedy, claim, liability, reimbursement, cause of action or other right. Except as otherwise expressly stated in this Agreement, the rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy shall not preclude or constitute a waiver of a right to use any or all other remedies. Such rights and remedies are given in addition to any other rights and remedies a party may have by Law or otherwise.

13.6 Governing Law; Severability . This Agreement (including any matters relating to ARTICLE IX and/or any substantive or procedural issues relating to any arbitration pursuant thereto that are not governed by the ICC Rules) is governed by and shall be construed in accordance with Wisconsin Law, excluding any conflict of laws rule or principle that might refer the governance or the construction of this Agreement to the law of another jurisdiction. Nothing in this Agreement shall preclude bringing enforcement proceedings in any jurisdiction in order to enforce any judgment obtained in any other proceeding or to compel arbitration or enforce an order or judgment of the arbitrator, nor shall the bringing of such enforcement proceedings in any one or more jurisdictions preclude the bringing of enforcement proceedings in any other jurisdiction. If any noncompetition restriction on the activities of the Corporation and its Subsidiaries set forth in ARTICLE VIII of this Agreement is determined to be invalid, illegal or unenforceable, such restriction shall remain in full force and effect to the extent determined to be valid, legal and enforceable.

13.7 Further Assurances . In connection with this Agreement and the transactions contemplated hereby, each Shareholder (and their permitted successors or assigns) shall execute and deliver any additional documents and instruments and perform any additional acts that may be reasonably necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions.

13.8 Language . This Agreement has been drafted and executed in English. In the event this Agreement is translated into any other language, such translation shall be for informational purposes and the English version shall prevail over any other version.

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13.9 Directly or Indirectly; Without Limitation . Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, including actions taken by or on behalf of any Affiliate of such Person. Throughout this Agreement, the term “ including ” and words to the same or similar effect shall be interpreted and construed to mean “including without limitation.”

13.10 Fees and Expenses . Each of the Parties will bear its own costs and expenses (including without limitation the fees and expenses of any advisor, accountant, attorney or other representative retained by it, including any brokerage, commission, finder’s or financial advisory fees) incurred in connection with this Agreement and the transactions contemplated hereby.

13.11 References . All references herein to one gender shall include the others and the singular shall include the plural and vice versa as appropriate. All references to an entity shall be deemed to include its successors and assigns, to the extent succession or assignment is not restricted by this Agreement. Unless otherwise expressly provided, all references to “ ARTICLES ” or “ Sections ” are to Articles or Sections of this Agreement.

13.12 Counterparts . This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

13.13 Headings . The Article and Section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.


SHAREHOLDERS:

ADS VENTURES, INC.		TIGRE S.A.-TUBOS E CONEXÕES

By:	/s/ J. A. Chlapaty	By:	/s/ Otto von Sothen

Name:	Joseph A. Chlapaty	Name:	Otto R. B. von Sothen

Title:	President & CEO	Title:	President Director

		By:	/s/ Luis Ferreira

		Name:	Luis R. Wenzel Ferreira

		Title:	Director

CORPORATION: TIGRE-ADS USA INC.

By:	/s/ Otto von Sothen	By:	/s/ Luis Ferreira

Name:	Otto R. B. von Sothen	Name:	Luis R. Wenzel Ferreira

Title:	President	Title:	Vice President

ADS PARENT: ADVANCED DRAINAGE SYSTEMS, INC.

By:	/s/ J. A. Chlapaty

Name:	Joseph A. Chlapaty

Title:	President & CEO

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EXHIBIT A

Definitions

“ ADS Indemnitees ” has the meaning set forth in Section 12.5(b).

“ ADS Parent ” has the meaning set forth in the preamble.

“ ADS Shareholder ” has the meaning set forth in Section 8.1(b)(ii).

“ ADS Ventures ” has the meaning set forth in the preamble.

“ Affected Shareholder ” has the meaning set forth in Section 7.1.

“ Affiliate ” means, with respect to any Person, any other Person that (a) owns or controls the first Person, (b) is owned or controlled by the first Person or (c) is under common ownership or control with first Person, where “ own ” means direct or indirect ownership of more than fifty percent (50%) of the equity interest or rights to distributions on account of equity of the Person and “ control ” means the direct or indirect power to direct the management or policies of the Person, whether through the ownership of voting securities, by contract, or otherwise.

“ Agreement ” has the meaning set forth in the preamble.

“ Articles of Incorporation ” means the Corporation’s articles of incorporation, as the same may be amended from time to time.

“ Bankrupt Shareholder ” means any Shareholder: (a) that (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered against the Shareholder an order for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for the Shareholder a reorganization, arrangement, composition, conciliation, readjustment, liquidation, dissolution, suspension of payments, concurso mercantil or similar relief under any Law, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Shareholder in a proceeding of the type described in subsections (i) through (iv) of subsection (a) of this definition, or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, Síndico, conciliator or liquidator of the Shareholder or of all or any substantial part of the Shareholder’s properties; or (b) against which a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, suspension of payments, or similar relief under any Law has been commenced and one hundred twenty (120) Days have expired without dismissal or stay thereof or with respect to which, without the Shareholder’s consent or acquiescence, a trustee, receiver, Síndico, conciliator or liquidator of the Shareholder or of all or any substantial part of the Shareholder’s properties has been appointed and one hundred twenty (120) Days have expired without the decree or order making such appointment having been vacated or stayed, or one hundred twenty (120) Days have expired after the date of expiration of a stay, if the appointment has not previously been vacated.

“ Budget ” means the then-current budget of the Corporation approved in accordance with Section 5.1(f).

“ Business ” means manufacturing, marketing, selling and servicing Products.

“ Business Day ” means any day other than a Saturday, a Sunday, or a holiday on which banks in Chicago, Illinois are required or permitted by Law to be closed.

“ Cash ” means U.S. dollars.

“ Change of Control ” means, with respect to any Shareholder, that any of the following events shall have occurred with respect to such Shareholder or any Owner Party: (a) an Owner Party enters into an agreement to merge, consolidate or reorganize into or with another Person, and as a result, immediately after such transaction, less than a majority of the voting securities of the Person resulting from such transaction will be held in the aggregate by Persons who together held a majority of the voting securities of the Owner Party immediately prior to such transaction ( provided, however , that a change in ownership of voting securities that does not actually change the Persons who together possess, directly or indirectly, the power to direct or cause the direction of the management or policies of the Owner Party on ordinary course matters, whether through the power to elect directors or otherwise, shall not constitute a “Change of Control” under this subsection (a) solely due to the change in the ownership of voting securities); (b) an Owner Party enters into an agreement to sell or otherwise transfer all or substantially all of its assets to another Person, and as a result, immediately after such transaction, less than a majority of the voting securities of the Person holding such assets will be held in the aggregate by Persons who together held a majority of the voting securities of the Owner Party immediately prior to such transaction; or (c) during any continuous twelve (12)-month period, holders of voting securities of an Owner Party sell or enter into agreements to sell voting securities of the Owner Party and as a result, less than a majority of the voting securities of the Owner Party will be held in the aggregate by Persons who together held a majority of the voting securities of the Owner Party at the beginning of such twelve (12)-month period.

“ Code ” means the U.S. Internal Revenue Code of 1986, as heretofore or hereafter amended, and any successor statute thereto.

“ Corporation Indemnitees ” has the meaning set forth in Section 12.5.

“ Competing Business ” means, with respect to ADS Ventures or its Affiliates, manufacturing, marketing, selling and/or servicing plastic (including polyethylene, polypropylene and PVC) or concrete pipe and/or fittings and, with respect to Tigre Parent or its Affiliates, manufacturing, marketing, selling and/or servicing plastic (including polyethylene, polypropylene and PVC) or concrete pipe and/or fittings. A Person is engaged, directly or indirectly, in a Competing Business if twenty percent (20%) or more of the aggregate gross revenue of such Person and such Person’s Affiliates on a consolidated basis is derived from such Competing Business.

“ Confidential Information ” means, (a) with respect to a Shareholder, any and all information (including operational, commercial and financial information) developed or disclosed by such Shareholder or its Affiliate relating to (i) such Shareholder or (iii) any Affiliate of such Shareholder and (b) with respect to the Corporation or any Subsidiary, any and all information (including operational, commercial and financial information) developed or disclosed by the Corporation or such Subsidiary relating to the Business; provided, however , that “Confidential

Information” does not include information that (1) is in or enters the public domain through no fault of the Person receiving such information, (2) was in the possession of a Person prior to such Person’s receipt of such information in connection with the Business (as evidenced by records kept by such Person in the ordinary course of business) or (3) becomes known to the Person receiving such information from a third party which is lawfully entitled to disclose such information without any restriction on its disclosure. For avoidance of doubt, the contents of this Agreement shall be deemed Confidential Information of each Shareholder and the Corporation.

“ Confidentiality Agreement ” means that certain Confidentiality Agreement dated December 10, 2013 between Tigre Parent, ADS Parent and ADS Ventures.

“ Consolidated Net Profits ” has the meaning ascribed thereto under GAAP.

“ Corporation ” has the meaning set forth in the preamble.

“ Day ” means a calendar day; provided, however, that, if any period of Days referred to in this Agreement shall end on a Day that is not a Business Day, then the expiration of such period shall be automatically extended until the first succeeding Business Day.

“ Deadlock ” has the meaning set forth in Section 5.2.

“ Deadlock Closing ” has the meaning set forth in Section 5.2(b)(iii).

“ Disclosing Shareholder ” has the meaning set forth in Section 8.3(a)(i).

“ Dispose ”, “ Disposed ”, “ Disposing ” and/or “ Disposition ” means, with respect to any asset (including any Shares), a sale, assignment, transfer, conveyance, gift, exchange, or other disposition of such asset, whether such disposition be voluntary, involuntary, or by operation of law, including the following: (a) in the case of an asset owned by an Entity, (i) a merger or consolidation of such Entity, (ii) a conversion of such Entity into another type of Entity, or (iii) a distribution of such asset in connection with the dissolution, liquidation, winding-up, or termination of such Entity (unless, in the case of dissolution, such Entity’s business is continued without the commencement of liquidation or winding-up); and (b) a disposition in connection with, or in lieu of, a foreclosure of an Encumbrance; but such terms shall not include the creation of an Encumbrance.

“ Disposing Shareholder ” means a Shareholder Disposing of its Shares in accordance with this Agreement.

“ Dispute ” has the meaning set forth in Section 9.1.

“ Dissolution Event ” has the meaning set forth in Section 10.1.

“ EBITDA ” means net income before interest, income taxes, depreciation and amortization of the Business, determined in accordance with GAAP and IFRS.

“ Effective Date ” has the meaning set forth in the preamble.

“ Encumber ”, “ Encumbering ” or “ Encumbrance ” means a security interest, lien, pledge, mortgage or other encumbrance or the creation thereof, whether such encumbrance be voluntary, involuntary, or by operation of law.

“ Entity ” means any corporation, limited liability company, partnership, limited partnership, venture, trust, estate, governmental entity, or other entity.

“ Exercise Period ” has the meaning set forth in Section 5.2(b)(ii).

“ Existing Arbitration ” has the meaning set forth in Section 9.1(a).

“ Exiting Shareholder ” has the meaning set forth in Section 8.1(a)(ii).

“ Fiscal Year ” means the calendar year.

“ Formal Termination Valuation ” has the meaning set forth in Section 7.4(c)(iv).

“ GAAP ” means U.S. generally accepted accounting principles.

“ Guaranteed Debts ” has the meaning set forth in Section 12.4.

“ ICC Rules ” has the meaning set forth in Section 9.1(b).

“ IFRS ” means the International Financial Reporting Standards.

“ Indemnitee ” means a Person entitled to indemnification pursuant to Section 12.5.

“ Initiating Shareholder ” has the meaning set forth in Section 5.2(b)(i).

“ Intellectual Property ” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, and rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) ideas, research and development, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, tolerances, drawings and specifications, (f) all computer software (including source code, executable code, data, databases, and related documentation), (g) all advertising and promotional materials, and (h) all copies and tangible embodiments thereof (in whatever form or medium).

“ Knowledge ” means actual knowledge after reasonable investigation.

“ Law ” means any statute or law or any judgment, decree, order, regulation or rule of any court or governmental authority.

“ License Agreements ” means the ADS License Agreement, the Tigre Parent License Agreement and all joinders thereto entered into by Subsidiaries and/or all license or sublicense agreements between, on one hand, either ADS, Tigre Parent and/or one of their respective Affiliates and, on the other hand, the Corporation or any Subsidiary.

“ Lien ” means any mortgage, pledge, lien, encumbrance, charge, or other security interest.

“ Major Matters ” has the meaning set forth in Section 5.1(b).

“ Material Breach Arbitration Award ” has the meaning set forth in Section 7.2(b)(ii).

“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“ Other Party Indemnitees ” has the meaning set forth in Section 12.5.

“ Owner Party ” means, with respect to any Shareholder, such Shareholder and any Person holding, directly or indirectly, a majority of the voting securities of such Shareholder.

“ Parent ” means, with respect to ADS, ADS Parent, and, with respect to Tigre Parent, Tigre Parent.

“ Party ” and “ Parties ” have the meanings set forth in the preamble.

“ Person ” means any natural person or Entity.

“ Pro Rata ”, with respect to the Shareholder, means in accordance with their relative percentage holdings of Shares.

“ Products ” means (a) PVC fittings that connect to PVC pipe or other PVC fittings, (b) the commercially available plastic fittings manufactured or supplied by the Corporation as of the Effective Date that connect to plastic pipe or other plastic fittings, all of which are set forth on Exhibit B attached hereto, (c) the plastic fittings in development by the Corporation as of the Effective Date that connect to plastic pipe or other plastic fittings, all of which are set forth on Exhibit C attached hereto, (d) any product that is the same as, or similar in all material respects to the design, function, base raw materials and targeted application of, any of the products set forth on Exhibit B or Exhibit C attached hereto, and (e) such other products as may be added to the product lines of the Corporation or any of its Subsidiaries in connection with product line expansions approved from time to time by all of the Shareholders.

“ Prohibited List ”, with respect to a Shareholder, means that certain list that such Shareholder has delivered to the other Shareholder in connection with the execution and delivery of this Agreement, which such list contains the names of (a) direct competitors of such Shareholder and (b) Persons that such Shareholder has, in its sole discretion, deemed would be an unsatisfactory co-shareholder with respect to the Business.

“ Proposed Budget ” has the meaning set forth in Section 5.1(f).

“ Purchase and Sale Notice ” has the meaning set forth in Section 5.2(b)(i).

“ Receiving Person ” means each Shareholder (and its Affiliates), the Corporation (and its Affiliates) and each of ADS Parent (and its Affiliates) and Tigre Parent (and its Affiliates) to the extent that such Person has received Confidential Information of a Disclosing Shareholder, the Corporation or a Subsidiary of the Corporation.

“ Regulations ” means the Treasury Regulations promulgated under the Code from time to time.

“ Related Agreements ” has the meaning set forth in Section 9.1(a).

“ Related Persons ” has the meaning set forth in Section 8.3(e).

“ Responding Shareholder ” has the meaning set forth in Section 5.2(b)(i).

“ Second Notice ” has the meaning set forth in Section 5.2(b)(ii).

“ Shares ” has the meaning set forth in Section 2.1.

“ Shareholder ” and “ Shareholders ” have the meaning set forth in the preamble.

“ Subsidiary ” means any Entity with respect to which the Corporation (or any Subsidiary thereof) owns a majority of the equity interests or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors or trustees.

“ Tax ” or “ Taxes ” means any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock/securities, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, or estimated tax, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ Termination Buyer ” has the meaning set forth in Section 7.4(c).

“ Termination Event ” has the meaning set forth in Section 7.1.

“ Termination Option Period ” has the meaning set forth in Section 7.4(b).

“ Tigre Indemnitees ” has the meaning set forth in Section 12.5(a).

“ Tigre Parent ” has the meaning set forth in the preamble.

“ Tigre Shareholder ” has the meaning set forth in Section 8.1(b)(iv).

“ Transaction Documents ” means this Agreement, the License Agreements, the USA ADS Sales Agent Agreement, the USA ADS Services Agreement, and any substantially similar agreements entered into between, on the one hand, either ADS Parent, Tigre Parent and/or one of their respective Affiliates, and, on the other hand, the Corporation and/or one or more of the Subsidiaries.

“ U.S. ” means the United States of America, including Puerto Rico.

“ USA ADS License Agreement ” means the USA Patents, Trademarks and Know-How License Agreement executed in connection with this Agreement pursuant to which the Corporation has been licensed to use certain Intellectual Property of ADS Parent and its Affiliates as specified therein.

“ USA ADS Sales Agent Agreement ” means the USA Sales Agent Agreement executed in connection with this Agreement by which the Corporation and/or one or more of its Subsidiaries authorizes ADS Parent to sell Products as its sales agent.

“ USA ADS Services Agreement ” means the USA Services Agreement executed in connection with this Agreement by which the Corporation authorizes ADS Parent to perform certain services for the Corporation and/or one or more of its Subsidiaries.

“ USA Material Breach Buy/Sell Notice ” has the meaning set forth in Section 7.2(b)(i).

“ USA Tigre License Agreement ” means the license agreement with the Corporation executed in connection with this Agreement licensing the Corporation to use certain Intellectual Property of Tigre Parent and its Affiliates.

“ Valuation Specialist ” means an independent valuation specialist mutually agreed by the Shareholders.

“ Wisconsin Business Corporation Law ” means Chapter 180 of the Wisconsin Statutes, as heretofore or hereafter amended, and any successor statute thereto.

“ Wisconsin Law ” means the Laws of the State of Wisconsin, United States of America.

* * * * * *

EXHIBIT B

Corporation’s Existing Products

As of the Effective Date, the commercially available products manufactured by the Corporation consist of the following:


Plumbing / HVAC / Industrial / Electrical / Commercial / Water Works / Irrigation		Sizes
DWV PVC SCH40		1 1/4” to 48”
SCH40 Pressure Fittings		1/4” to 48”
SDR35SW (Drainage—Residential)		1 1/2” to 48”
SCH80		1/2” to 48”
SDR35 G (Sewer)		4” to 48”
SDR26 G (Sewer)		4” to 48”
SDR35 SW (Sewer)		1 1/2” to 48”

* * * * * *

EXHIBIT C

Tigre Parent Excluded Products Under Development

As of the Effective Date, the products in development by the Corporation consist of the following:


Plumbing / HVAC / Industrial / Electrical / Commercial / Water Works / Irrigation		Sizes
DWV ABS SCH40		1 1/4” to 48”
DWV PVC SCH30 (Thin Wall)		1 1/4” to 48”
Valves		1/2” to 48”
Nipples		all sizes and types
CPVC CTS		1/2” to 4”
PEX		all sizes and types
Electrical SCH40 Fittings and Accessories		1/2” to 12”
CPVC Fire Protection—Pipes and Fittings		1/2” to 4”
CPVC IPS		1/2” to 4”
SDR21 G (Water)		1 1/4” to 48”
C900 Pressure (Water)		4” to 48”
C900 Non Pressure (Sewer)		4” to 48”
BACKVALVES		all types and sizes

* * * * * *

SCHEDULE I

Shareholders


Name and Address of Shareholders		Number of Shares
Tigre S.A.—Tubos e Conexões Rua Xavantes, 54, Atiradores Joinville, Santa Catarina Brazil, 89203-900		510
ADS Ventures, Inc. 4640 Trueman Blvd. Hilliard, Ohio 43026		490
TOTAL		1,000

SCHEDULE II

Financial and Other Reporting

1.	Monthly – no later than twenty-five (25) Business Days after the last day of each month – unaudited management accounts for the immediately preceding month comprising:

(a) a profit and loss account and cash flow statement;

(b) a balance sheet as at the end of the immediately preceding month;

(d) a forecast for the performance of the Corporation in the immediately following month.

2.	Annually – no later than sixty (60) Business Days after the end of each Fiscal Year, audited financial statements (including consolidated profit and loss accounts, balance sheets and cash flow statements) in respect of that Fiscal Year.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Amendment No. 4 to Registration Statement No. 333-194980 of our report dated May 19, 2014, relating to the consolidated financial statements of Advanced Drainage Systems, Inc. and subsidiaries, appearing in the Prospectus, which is part of this Registration Statement, and of our report dated May 19, 2014, relating to the financial statement schedule appearing elsewhere in this Registration Statement.

We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ Deloitte & Touche LLP

Columbus, Ohio

July 2, 2014